SM BlackRock Funds VI · Investing in the Fund, the Underlying Funds and/or the ETFs,” or...

BLACKROCK FUNDS VBlackRock Low Duration Bond Portfolio

(the “Fund”)Investor A1 Shares

Supplement dated November 24, 2020 to theSummary Prospectus of the Fund, dated February 6, 2020, and

Prospectus of the Fund, dated January 28, 2020,as amended and/or supplemented to date

On November 19, 2020, the Board of Trustees of BlackRock Funds V approved the appointment of BlackRock(Singapore) Limited as the sub-adviser of the Fund, pursuant to a separate sub-advisory agreement betweenBlackRock (Singapore) Limited and BlackRock Advisors, LLC with respect to the Fund. The addition ofBlackRock (Singapore) Limited as the sub-adviser of the Fund is effective as of November 24, 2020.

The following changes are made to the Fund’s Summary Prospectus and Prospectus, as applicable:

The second and third sentences in the section of the Summary Prospectus entitled “Key Facts AboutBlackRock Low Duration Bond Portfolio—Investment Manager” and the second and third sentences inthe section of the Prospectus entitled “Fund Overview—Key Facts About BlackRock Low Duration BondPortfolio—Investment Manager” are deleted in their entirety and replaced with the following:

The Fund’s sub-advisers are BlackRock International Limited and BlackRock (Singapore) Limited. Whereapplicable, the use of the term BlackRock also refers to the Fund’s sub-advisers.

The second sentence of the second paragraph in the section of the Prospectus entitled “Management of theFunds—BlackRock” is deleted in its entirety and replaced with the following:

BlackRock International Limited (“BIL”), sub-adviser to each Fund, and BlackRock (Singapore) Limited(“BRS”), sub-adviser to the Low Duration Fund, are registered investment advisers organized in 1995 and 2000,respectively.

The following is added as the ninth paragraph in the section of the Prospectus entitled “Management ofthe Funds—BlackRock”:

BlackRock has entered into a sub-advisory agreement with BRS, an affiliate of BlackRock, with respect to theLow Duration Fund. Under the sub-advisory agreement, BlackRock pays BRS for services it provides for thatportion of the Low Duration Fund for which it acts as sub-adviser a fee equal to a percentage of the managementfee paid to BlackRock under the Management Agreement with respect to the Low Duration Fund.

The thirteenth paragraph in the section of the Prospectus entitled “Management of the Funds—BlackRock” is supplemented as follows:

A discussion of the basis for the Board’s approval of the sub-advisory agreement between BlackRock and BRSwith respect to the Low Duration Fund will be included in the Fund’s semi-annual shareholder report for theperiod ending March 31, 2021.

Shareholders should retain this Supplement for future reference.

PR2-LOWD-PRI-1120SUP


(the “Fund”)

Supplement dated October 15, 2020 to the Summary Prospectuses andProspectuses of the Fund, each dated January 28, 2020,

as amended and supplemented to date

Effective immediately, the following changes are made to the Fund’s Summary Prospectuses andProspectuses, as applicable:

The section of each Summary Prospectus entitled “Key Facts About BlackRock Low Duration BondPortfolio — Portfolio Managers” and the section of each Prospectus entitled “Fund Overview — Key FactsAbout BlackRock Low Duration Bond Portfolio — Portfolio Managers” are deleted in its entirety andreplaced with the following:

NamePortfolio Manager of

the Fund Since Title

Bob Miller 2020 Managing Director of BlackRock, Inc.

Akiva Dickstein 2020 Managing Director of BlackRock, Inc.

Scott MacLellan, CFA 2012* Director of BlackRock, Inc.

* Includes management of the Predecessor Fund.

The section of each Prospectus entitled “Details About the Funds — How Each Fund Invests — About thePortfolio Management of the Low Duration Fund” is deleted in its entirety and replaced with thefollowing:

ABOUT THE PORTFOLIO MANAGEMENT OF THE LOW DURATION FUND

The Low Duration Fund is managed by a team of financial professionals. Bob Miller, Akiva Dickstein andScott MacLellan, CFA are the portfolio managers and are jointly and primarily responsible for the day-to-daymanagement of the Fund. Please see “Management of the Funds — Portfolio Manager Information” foradditional information about the portfolio management team.

The section of each Prospectus entitled “Management of the Funds — Portfolio Manager Information —Low Duration Fund” is deleted in its entirety and replaced with the following:

The Low Duration Fund is managed by a team of financial professionals. Bob Miller, Akiva Dickstein and ScottMacLellan, CFA are jointly and primarily responsible for the day-to-day management of the Fund.

Portfolio Manager Primary Role Since Title and Recent Biography

Bob Miller Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2020 Managing Director of BlackRock, Inc.since 2011; Co-Founder and Partner ofRound Table Investment ManagementCompany from 2007 to 2009;Managing Director of Bank ofAmerica from 1999 to 2007.

Akiva Dickstein Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2020 Managing Director of BlackRock, Inc.since 2009; Managing Director ofMerrill Lynch from 2003 to 2009 andHead of the U.S. Rates & StructuredCredit Research Group.

Scott MacLellan,CFA

Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2012* Director of BlackRock, Inc. since2010; Vice President of BlackRock,Inc. from 2007 to 2009.



PR2-LOWD-1020SUP

2

BlackRock Allocation Target SharesBATS: Series A PortfolioBATS: Series C PortfolioBATS: Series E PortfolioBATS: Series M PortfolioBATS: Series P PortfolioBATS: Series S Portfolio

BlackRock Balanced Capital Fund, Inc.

BlackRock Bond Fund, Inc.BlackRock Total Return Fund

BlackRock FundsSM

BlackRock Tactical Opportunities FundBlackRock Total Emerging Markets FundBlackRock Total Factor Fund

BlackRock Funds IIBlackRock 20/80 Target Allocation FundBlackRock 40/60 Target Allocation FundBlackRock 60/40 Target Allocation FundBlackRock 80/20 Target Allocation FundBlackRock Dynamic High Income PortfolioBlackRock LifePath® Smart Beta Retirement FundBlackRock LifePath® Smart Beta 2025 FundBlackRock LifePath® Smart Beta 2030 FundBlackRock LifePath® Smart Beta 2035 FundBlackRock LifePath® Smart Beta 2040 FundBlackRock LifePath® Smart Beta 2045 FundBlackRock LifePath® Smart Beta 2050 FundBlackRock LifePath® Smart Beta 2055 FundBlackRock LifePath® Smart Beta 2060 FundBlackRock LifePath® Smart Beta 2065 FundBlackRock Managed Income FundBlackRock Multi-Asset Income Portfolio

BlackRock Funds IIIBlackRock LifePath® Dynamic RetirementFundBlackRock LifePath® Dynamic 2025 FundBlackRock LifePath® Dynamic 2030 FundBlackRock LifePath® Dynamic 2035 FundBlackRock LifePath® Dynamic 2040 FundBlackRock LifePath® Dynamic 2045 FundBlackRock LifePath® Dynamic 2050 FundBlackRock LifePath® Dynamic 2055 FundBlackRock LifePath® Dynamic 2060 FundBlackRock LifePath® Dynamic 2065 Fund

BlackRock Funds IVBlackRock Global Long/Short Credit FundBlackRock Systematic ESG Bond FundBlackRock Systematic Multi-Strategy Fund

BlackRock Funds VBlackRock Core Bond PortfolioBlackRock Emerging Markets Bond FundBlackRock Emerging Markets FlexibleDynamic Bond PortfolioBlackRock Floating Rate Income PortfolioBlackRock GNMA PortfolioBlackRock High Yield Bond PortfolioBlackRock Income FundBlackRock Inflation Protected Bond PortfolioBlackRock Low Duration Bond PortfolioBlackRock Strategic Income Opportunities PortfolioBlackRock U.S. Government Bond Portfolio

BlackRock Funds VIBlackRock CoreAlpha Bond Fund

BlackRock Global Allocation Fund, Inc.

BlackRock Large Cap Series Funds, Inc.BlackRock Event Driven Equity Fund

BlackRock Multi-State Municipal Series TrustBlackRock New York Municipal Opportunities FundBlackRock Pennsylvania Municipal Bond Fund

BlackRock Municipal Bond Fund, Inc.BlackRock High Yield Municipal FundBlackRock National Municipal Fund

BlackRock Municipal Series TrustBlackRock Strategic Municipal Opportunities Fund

BlackRock Series Fund, Inc.BlackRock Balanced Capital PortfolioBlackRock Global Allocation Portfolio

BlackRock Series Fund II, Inc.BlackRock High Yield PortfolioBlackRock U.S. Government Bond Portfolio

BlackRock Strategic Global Bond Fund, Inc.

BlackRock Variable Series Funds, Inc.BlackRock Global Allocation V.I. FundBlackRock Managed Volatility V.I. Fund

BlackRock Variable Series Funds II, Inc.BlackRock High Yield V.I. FundBlackRock Total Return V.I. FundBlackRock U.S. Government Bond V.I. Fund

Managed Account SeriesBlackRock GA Disciplined Volatility Equity FundBlackRock GA Dynamic Equity Fund

Managed Account Series IIBlackRock U.S. Mortgage Portfolio

(each, a “Fund” and collectively, the “Funds”)

Supplement dated August 5, 2020 to the Prospectus(es) of each Fund

Effective immediately, the Prospectus(es) of each Fund is amended as follows:

The section of each Fund’s Prospectus(es) entitled “Details About the Fund[s] — Investment Risks,”“Details About the Fund — Investment Risks — Other Risks of Investing in the Fund” or “Details Aboutthe Funds — A Further Discussion of Risk Factors — Other Risks of Investing in the Funds,” asapplicable, is amended to add the following as an other risk:

LIBOR Risk — The Fund may be exposed to financial instruments that are tied to the London Interbank OfferedRate (“LIBOR”) to determine payment obligations, financing terms, hedging strategies or investment value. TheFund’s investments may pay interest at floating rates based on LIBOR or may be subject to interest caps or floorsbased on LIBOR. The Fund may also obtain financing at floating rates based on LIBOR. Derivative instrumentsutilized by the Fund may also reference LIBOR.

In 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the useof LIBOR by the end of 2021, and it is expected that LIBOR will cease to be published after that time. The Fundmay have investments linked to other interbank offered rates, such as the Euro Overnight Index Average(“EONIA”), which may also cease to be published. Various financial industry groups have begun planning forthe transition away from LIBOR, but there are challenges to converting certain securities and transactions to anew reference rate (e.g., the Secured Overnight Financing Rate (“SOFR”), which is intended to replace the U.S.dollar LIBOR).

Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. The transitionprocess might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of newhedges placed against, instruments whose terms currently include LIBOR. While some existing LIBOR-basedinstruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, there may be significant uncertainty regarding the effectiveness of any such alternativemethodologies to replicate LIBOR. Not all existing LIBOR-based instruments may have alternative rate-settingprovisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. In addition, a liquid market for newly-issued instruments thatuse a reference rate other than LIBOR still may be developing. There may also be challenges for the Fund toenter into hedging transactions against such newly-issued instruments until a market for such hedgingtransactions develops. All of the aforementioned may adversely affect the Fund’s performance or NAV.


PRO-LIBOR-0820SUP

2

BlackRock Advantage Global Fund, Inc.

BlackRock Allocation Target SharesBATS: Series C PortfolioBATS: Series S Portfolio

BlackRock Asian Dragon Fund, Inc.


BlackRock Basic Value Fund, Inc.


BlackRock Emerging Markets Fund, Inc.

BlackRock Equity Dividend Fund

BlackRock EuroFund

BlackRock FundsSM

BlackRock Advantage Emerging Markets FundBlackRock Advantage International FundBlackRock Commodity Strategies FundBlackRock Energy Opportunities FundBlackRock Global Impact FundBlackRock Global Long/Short Equity FundBlackRock Health Sciences OpportunitiesPortfolioBlackRock High Equity Income FundBlackRock International Dividend FundBlackRock International Impact FundBlackRock Tactical Opportunities FundBlackRock Technology Opportunities FundBlackRock Total Emerging Markets FundBlackRock Total Factor FundBlackRock U.S. Impact FundiShares Developed Real Estate Index FundiShares Edge MSCI Min Vol EAFE Index FundiShares Edge MSCI Multifactor Intl Index Fund

BlackRock Funds IIBlackRock 20/80 Target Allocation FundBlackRock 40/60 Target Allocation FundBlackRock 60/40 Target Allocation FundBlackRock 80/20 Target Allocation FundBlackRock Dynamic High Income PortfolioBlackRock Global Dividend PortfolioBlackRock LifePath® Smart Beta RetirementFundBlackRock LifePath® Smart Beta 2025 FundBlackRock LifePath® Smart Beta 2030 FundBlackRock LifePath® Smart Beta 2035 Fund

BlackRock LifePath® Smart Beta 2040 FundBlackRock LifePath® Smart Beta 2045 FundBlackRock LifePath® Smart Beta 2050 FundBlackRock LifePath® Smart Beta 2055 FundBlackRock LifePath® Smart Beta 2060 FundBlackRock LifePath® Smart Beta 2065 FundBlackRock Managed Income FundBlackRock Multi-Asset Income Portfolio

BlackRock Funds IIIBlackRock LifePath® Dynamic RetirementFundBlackRock LifePath® Dynamic 2025 FundBlackRock LifePath® Dynamic 2030 FundBlackRock LifePath® Dynamic 2035 FundBlackRock LifePath® Dynamic 2040 FundBlackRock LifePath® Dynamic 2045 FundBlackRock LifePath® Dynamic 2050 FundBlackRock LifePath® Dynamic 2055 FundBlackRock LifePath® Dynamic 2060 FundBlackRock LifePath® Dynamic 2065 FundBlackRock LifePath® Index Retirement FundBlackRock LifePath® Index 2025 FundBlackRock LifePath® Index 2030 FundBlackRock LifePath® Index 2035 FundBlackRock LifePath® Index 2040 FundBlackRock LifePath® Index 2045 FundBlackRock LifePath® Index 2050 FundBlackRock LifePath® Index 2055 FundBlackRock LifePath® Index 2060 FundBlackRock LifePath® Index 2065 FundiShares MSCI Total International Index Fund

BlackRock Funds IVBlackRock Global Long/Short Credit FundBlackRock Systematic ESG Bond FundBlackRock Systematic Multi-Strategy Fund

BlackRock Funds VBlackRock Core Bond PortfolioBlackRock Emerging Markets Bond FundBlackRock Emerging Markets FlexibleDynamic Bond PortfolioBlackRock Floating Rate Income PortfolioBlackRock High Yield Bond PortfolioBlackRock Income FundBlackRock Inflation Protected Bond PortfolioBlackRock Low Duration Bond PortfolioBlackRock Strategic Income OpportunitiesPortfolioBlackRock U.S. Government Bond Portfolio

BlackRock Funds VIBlackRock CoreAlpha Bond Fund


BlackRock Index Funds, Inc.iShares MSCI EAFE International Index Fund

BlackRock Large Cap Focus Growth Fund, Inc.


BlackRock Latin America Fund, Inc.

BlackRock Long-Horizon Equity Fund

BlackRock Mid Cap Dividend Series, Inc.BlackRock Mid Cap Dividend Fund

BlackRock Natural Resources Trust

BlackRock Series Fund, Inc.BlackRock Balanced Capital PortfolioBlackRock Global Allocation Portfolio


BlackRock Series, Inc.BlackRock International Fund


BlackRock Variable Series Funds, Inc.BlackRock 60/40 Target Allocation ETF V.I.FundBlackRock Basic Value V.I. FundBlackRock Equity Dividend V.I. FundBlackRock Global Allocation V.I. FundBlackRock International Index V.I. FundBlackRock International V.I. FundBlackRock Large Cap Focus Growth V.I. FundBlackRock Managed Volatility V.I. Fund


Managed Account SeriesBlackRock GA Disciplined Volatility EquityFundBlackRock GA Dynamic Equity Fund


Supplement dated June 8, 2020 to the Summary Prospectus(es), as applicable, and Prospectus(es) of eachFund

Effective immediately, the Summary Prospectus(es), as applicable, and Prospectus(es) of each Fund areamended as follows:

The following is added to the risk factor entitled “Foreign Securities Risk” in the section of each Fund’sSummary Prospectus(es), as applicable, entitled “Key Facts About [the Fund] — Principal Risks ofInvesting in the Fund” or “Key Facts About [the Fund] — Principal Risks of Investing in the Fund, theUnderlying Funds and/or the ETFs” and the section of each Fund’s Prospectus(es) entitled “FundOverview — Key Facts About [the Fund] — Principal Risks of Investing in the Fund” or “Fund Overview— Key Facts About [the Fund] — Principal Risks of Investing in the Fund, the Underlying Funds and/orthe ETFs,” as applicable:

• The Fund’s claims to recover foreign withholding taxes may not be successful, and if the likelihood ofrecovery of foreign withholding taxes materially decreases, due to, for example, a change in taxregulation or approach in the foreign country, accruals in the Fund’s net asset value for such refundsmay be written down partially or in full, which will adversely affect the Fund’s net asset value.

The following is added to the risk factor entitled “Foreign Securities Risk” in the section of each Fund’sProspectus(es) entitled “Details About the Fund[s] — Investment Risks — Principal Risks of Investing inthe Fund[s],” “Details About the Fund[s] — Investment Risks — Principal Risks of Investing in theUnderlying ETFs,” “Details About the Fund[s] — Investment Risks — Principal Risks of Investing in the

2

Funds and the Underlying Funds,” “Details About the Fund[s] — Investment Risks — Principal Risks ofInvesting in the Fund, the Underlying Funds and/or the ETFs,” or “Details About the Fund[s] — AFurther Discussion of Risk Factors — Principal Risks of the Underlying Funds,” as applicable:

Withholding Tax Reclaims Risk. The Fund may file claims to recover foreign withholding taxes on dividend andinterest income (if any) received from issuers in certain countries and capital gains on the disposition of stocks orsecurities where such withholding tax reclaim is possible. Whether or when the Fund will receive a withholdingtax refund is within the control of the tax authorities in such countries. Where the Fund expects to recoverwithholding taxes, the net asset value of the Fund generally includes accruals for such tax refunds. The Fundregularly evaluates the probability of recovery. If the likelihood of recovery materially decreases, due to, forexample, a change in tax regulation or approach in the foreign country, accruals in the Fund’s net asset value forsuch refunds may be written down partially or in full, which will adversely affect the Fund’s net asset value.Shareholders in the Fund at the time an accrual is written down will bear the impact of the resulting reduction innet asset value regardless of whether they were shareholders during the accrual period. Conversely, if the Fundreceives a tax refund that has not been previously accrued, shareholders in the Fund at the time of the successfulrecovery will benefit from the resulting increase in the Fund’s net asset value. Shareholders who sold their sharesprior to such time will not benefit from such increase in the Fund’s net asset value.


ALLPRO-TAX-0620SUP

3

BLACKROCK FUNDS VBlackRock High Yield Bond Portfolio

(the “Fund”)

Supplement dated May 22, 2020 to the Summary Prospectuses, each dated February 6, 2020,and the Prospectuses, each dated January 28, 2020, as amended and/or supplemented to date


The first paragraph of the section of each Summary Prospectus entitled “Key Facts About BlackRock HighYield Bond Portfolio — Principal Investment Strategies of the Fund” and the first paragraph of the sectionof each Prospectus entitled “Fund Overview — Key Facts About BlackRock High Yield Bond Portfolio —Principal Investment Strategies of the Fund” are deleted in their entirety and replaced with the following:

The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The HighYield Fund normally invests at least 80% of its assets in high yield bonds. The high yield securities (commonlycalled “junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the majorrating agencies (BB or lower by S&P Global Ratings or Fitch Ratings, Inc. or Ba or lower by Moody’s InvestorServices) or will be determined by the High Yield Fund management team to be of similar quality. Split rated bondsand other fixed-income securities (securities that receive different ratings from two or more rating agencies) arevalued as follows: if three agencies rate a security, the security will be considered to have the median credit rating; iftwo of the three agencies rate a security, the security will be considered to have the lower credit rating. The Fund mayinvest up to 30% of its assets in non-dollar denominated bonds of issuers located outside of the United States. TheHigh Yield Fund’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis.The Fund may also invest in convertible and preferred securities. Convertible debt securities will be counted towardthe Fund’s 80% policy to the extent they have characteristics similar to the securities included within that policy.

The first paragraph in the section of each Prospectus entitled “Details About the Funds — How Each Fund Invests— High Yield Fund — Principal Investment Strategies” is deleted in its entirety and replaced with the following:

The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The HighYield Fund normally invests at least 80% of its assets in high yield bonds. The 80% policy is a non-fundamental policyof the Fund and may not be changed without 60 days’ prior notice to shareholders. The high yield securities(commonly called “junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories ofthe major rating agencies (BB or lower by S&P Global Ratings or Fitch Ratings, Inc. or Ba or lower by Moody’sInvestor Services) or will be determined by the High Yield Fund management team to be of similar quality. Split ratedbonds and other fixed-income securities (securities that receive different ratings from two or more rating agencies) arevalued as follows: if three agencies rate a security, the security will be considered to have the median credit rating; iftwo of the three agencies rate a security, the security will be considered to have the lower credit rating. High yieldsecurities are sometimes referred to as “junk bonds,” which are debt securities rated lower than investment grade(below the fourth highest rating of the major rating agencies). These securities generally pay more interest than higherrated securities. The higher yield is an incentive to investors who otherwise may be hesitant to purchase the debt ofsuch a low-rated issuer. The Fund may invest up to 30% of its assets in non-dollar denominated bonds of issuerslocated outside of the United States. The High Yield Fund’s investment in non-dollar denominated bonds may be on acurrency hedged or unhedged basis. The Fund may also invest in convertible and preferred securities. Convertible debtsecurities will be counted toward the Fund’s 80% policy to the extent they have characteristics similar to the securitiesincluded within that policy. Convertible securities generally are debt securities or preferred stock that may be convertedinto common stock. Convertible securities typically pay current income as either interest (debt security convertibles) ordividends (preferred stock convertibles). A convertible security’s value usually reflects both the stream of currentincome payments and the market value of the underlying stock. Preferred stock is a class of stock that often paysdividends at a specified rate and has preference over common stock in dividend payments and liquidation of assets.


PRO-HYB-0520SUP


(the “Fund”)Investor A1 Shares

Supplement dated April 9, 2020 to the Summary Prospectus and Prospectus,dated January 28, 2020, as amended and supplemented to date

Effective April 13, 2020, the following changes are made to the Fund’s Summary Prospectus and Prospectus, asapplicable:

The section of the Fund’s Summary Prospectus entitled “Key Facts About BlackRock Low Duration BondPortfolio — Fees and Expenses of the Fund” and the section in the Fund’s Prospectus entitled “FundOverview — Key Facts About BlackRock Low Duration Bond Portfolio — Fees and Expenses of theFund” are deleted in their entirety and replaced with the following:

Fees and Expenses of the Fund

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Fees(fees paid directly from your investment)

Investor A1Shares

Maximum Sales Charge (Load) Imposed on Purchases (as percentage of offering price) None1

Maximum Deferred Sales Charge (Load) (as percentage of offering price or redemption proceeds,whichever is lower) None2

Annual Fund Operating Expenses(expenses that you pay each year as apercentage of the value of your investment)

Investor A1Shares

Management Fee3 0.29%

Distribution and/or Service (12b-1) Fees 0.10%

Other Expenses4,5 0.28%Interest Expense4,5 0.08%Other Expenses of the Fund 0.20%

Acquired Fund Fees and Expenses5 0.01%

Total Annual Fund Operating Expenses5 0.68%

Fee Waivers and/or Expense Reimbursements3,6 (0.09)%

Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements3,6 0.59%

1 Investor A1 Shares are subject to a maximum sales charge on purchases of 1.00%. The sales charge does not apply to dividend andcapital gain reinvestments by existing shareholders and new purchases for certain employer-sponsored retirement plans, which arecurrently the only investors who may invest in Investor A1 Shares.

2 A contingent deferred sales charge (“CDSC”) of 0.50% is assessed on certain redemptions of Investor A1 Shares made within 18 monthsafter purchase where no initial sales charge was paid at the time of purchase. The CDSC does not apply to redemptions by certainemployer-sponsored retirement plans or to redemptions of shares acquired through reinvestment of dividends and capital gains byexisting shareholders.

3 As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 40, BlackRock Advisors, LLC(“BlackRock”) has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to beattributable to investments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or itsaffiliates that have a contractual management fee, through January 31, 2021. In addition, BlackRock has contractually agreed to waive itsmanagement fees by the amount of investment advisory fees the Fund pays to BlackRock indirectly through its investment in moneymarket funds managed by BlackRock or its affiliates through January 31, 2021. The contractual agreements may be terminated upon90 days’ notice by a majority of the non-interested trustees of BlackRock Funds V (the “Trust”) or by a vote of a majority of theoutstanding voting securities of the Fund.

4 Interest Expense has been restated and is estimated based on the Fund’s current investment strategies, which reflects the Fund’s intentionto invest in reverse repurchase agreements. During the Fund’s most recent fiscal year, Interest Expense was equal to 0.00% for InvestorA1 Shares.

5 The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund’s mostrecent annual report, which do not include Acquired Fund Fees and Expenses or the restatement of Interest Expense which is estimatedbased on the Fund’s current investment strategies.

6 As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 40, BlackRock has contractuallyagreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/orExpense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fundexpenses) to 0.50% (for Investor A1 Shares) of average daily net assets through January 31, 2021. The contractual agreement may beterminated upon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstandingvoting securities of the Fund.

Example:This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in othermutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and thenredeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5%return each year and that the Fund’s operating expenses remain the same. Although your actual costs may behigher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years

Investor A1 Shares $60 $208 $370 $838

Portfolio Turnover:The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxeswhen shares are held in a taxable account. These costs, which are not reflected in annual fund operating expensesor in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolioturnover rate was 182% of the average value of its portfolio.

The section of the Fund’s Summary Prospectus entitled “Key Facts About BlackRock Low Duration BondPortfolio — Principal Investment Strategies of the Fund” and the section of the Fund’s Prospectus entitled“Fund Overview — Key Facts About BlackRock Low Duration Bond Portfolio — Principal InvestmentStrategies of the Fund” are deleted in their entirety and replaced with the following:

Principal Investment Strategies of the Fund

The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio durationthat is between 0 and 3 years.

The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fundmay invest up to 20% of its assets in non-investment grade bonds (commonly called “high yield” or “junkbonds”). The Low Duration Fund may also invest up to 35% of its assets in assets of foreign issuers, of which10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the LowDuration Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including anemerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either(i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars.

The management team evaluates sectors of the bond market and individual securities within these sectors. Themanagement team selects bonds from several sectors including: U.S. Treasuries and agency securities,commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”),asset-backed securities and corporate bonds.

The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter intocredit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonlyknown as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance

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returns. The Fund may seek to obtain market exposure to the securities in which it primarily invests by enteringinto a series of purchase and sale contracts or by using other investment techniques (such as reverse repurchaseagreements and mortgage dollar rolls).

The Low Duration Fund may engage in active and frequent trading of portfolio securities to achieve its principalinvestment strategies.

The section of the Fund’s Summary Prospectus entitled “Key Facts About BlackRock Low Duration BondPortfolio — Principal Risks of Investing in the Fund” and the section of the Fund’s Prospectus entitled“Fund Overview — Key Facts About BlackRock Low Duration Bond Portfolio — Principal Risks ofInvesting in the Fund” are deleted in their entirety and replaced with the following:

Principal Risks of Investing in the Fund

Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return youreceive on your investment, may fluctuate significantly from day to day and over time. You may lose part or allof your investment in the Fund or your investment may not perform as well as other similar investments. Thefollowing is a summary description of principal risks of investing in the Fund. The order of the below risk factorsdoes not indicate the significance of any particular risk factor.

• Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the returnon the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowingmay reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not beadvantageous to do so to satisfy its obligations.

• Debt Securities Risk — Debt securities, such as bonds, involve interest rate risk, credit risk, extension risk,and prepayment risk, among other things.

Interest Rate Risk — The market value of bonds and other fixed-income securities changes in response tointerest rate changes and other factors. Interest rate risk is the risk that prices of bonds and other fixed-incomesecurities will increase as interest rates fall and decrease as interest rates rise.

The Fund may be subject to a greater risk of rising interest rates due to the current period of historically lowrates. For example, if interest rates increase by 1%, assuming a current portfolio duration of ten years, and allother factors being equal, the value of the Fund’s investments would be expected to decrease by 10%. Themagnitude of these fluctuations in the market price of bonds and other fixed-income securities is generallygreater for those securities with longer maturities. Fluctuations in the market price of the Fund’s investmentswill not affect interest income derived from instruments already owned by the Fund, but will be reflected inthe Fund’s net asset value. The Fund may lose money if short-term or long-term interest rates rise sharply in amanner not anticipated by Fund management.

To the extent the Fund invests in debt securities that may be prepaid at the option of the obligor (such asmortgage-backed securities), the sensitivity of such securities to changes in interest rates may increase (to thedetriment of the Fund) when interest rates rise. Moreover, because rates on certain floating rate debt securitiestypically reset only periodically, changes in prevailing interest rates (and particularly sudden and significantchanges) can be expected to cause some fluctuations in the net asset value of the Fund to the extent that itinvests in floating rate debt securities.

These basic principles of bond prices also apply to U.S. Government securities. A security backed by the “fullfaith and credit” of the U.S. Government is guaranteed only as to its stated interest rate and face value atmaturity, not its current market price. Just like other fixed-income securities, government-guaranteed securitieswill fluctuate in value when interest rates change.

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A general rise in interest rates has the potential to cause investors to move out of fixed-income securities on alarge scale, which may increase redemptions from funds that hold large amounts of fixed-income securities.Heavy redemptions could cause the Fund to sell assets at inopportune times or at a loss or depressed value andcould hurt the Fund’s performance.

Credit Risk — Credit risk refers to the possibility that the issuer of a debt security (i.e., the borrower) will notbe able to make payments of interest and principal when due. Changes in an issuer’s credit rating or themarket’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in thatissuer. The degree of credit risk depends on both the financial condition of the issuer and the terms of theobligation.

Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly thananticipated, causing the value of these obligations to fall.

Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quicklythan originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.

• Derivatives Risk — The Fund’s use of derivatives may increase its costs, reduce the Fund’s returns and/orincrease volatility. Derivatives involve significant risks, including:

Volatility Risk — Volatility is defined as the characteristic of a security, an index or a market to fluctuatesignificantly in price within a short time period. A risk of the Fund’s use of derivatives is that the fluctuationsin their values may not correlate with the overall securities markets.

Counterparty Risk — Derivatives are also subject to counterparty risk, which is the risk that the other party inthe transaction will not fulfill its contractual obligation.

Market and Illiquidity Risk — The possible lack of a liquid secondary market for derivatives and the resultinginability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses and couldmake derivatives more difficult for the Fund to value accurately.

Valuation Risk — Valuation may be more difficult in times of market turmoil since many investors and marketmakers may be reluctant to purchase complex instruments or quote prices for them.

Hedging Risk — Hedges are sometimes subject to imperfect matching between the derivative and theunderlying security, and there can be no assurance that the Fund’s hedging transactions will be effective. Theuse of hedging may result in certain adverse tax consequences.

Tax Risk — Certain aspects of the tax treatment of derivative instruments, including swap agreements andcommodity-linked derivative instruments, are currently unclear and may be affected by changes in legislation,regulations or other legally binding authority. Such treatment may be less favorable than that given to a directinvestment in an underlying asset and may adversely affect the timing, character and amount of income theFund realizes from its investments.

Regulatory Risk — Derivative contracts, including, without limitation, swaps, currency forwards andnon-deliverable forwards, are subject to regulation under the Dodd-Frank Wall Street Reform and ConsumerProtection Act (the “Dodd-Frank Act”) in the United States and under comparable regimes in Europe, Asia andother non-U.S. jurisdictions. Under the Dodd-Frank Act, certain derivatives are subject to margin requirementsand swap dealers are required to collect margin from the Fund with respect to such derivatives. Specifically,regulations are now in effect that require swap dealers to post and collect variation margin (comprised ofspecified liquid instruments and subject to a required haircut) in connection with trading of over-the-counter(“OTC”) swaps with the Fund. Shares of investment companies (other than certain money market funds) may

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not be posted as collateral under these regulations. Requirements for posting of initial margin in connectionwith OTC swaps will be phased-in through at least 2021. In addition, regulations adopted by global prudentialregulators that are now in effect require certain bank-regulated counterparties and certain of their affiliates toinclude in certain financial contracts, including many derivatives contracts, terms that delay or restrict therights of counterparties, such as the Fund, to terminate such contracts, foreclose upon collateral, exercise otherdefault rights or restrict transfers of credit support in the event that the counterparty and/or its affiliates aresubject to certain types of resolution or insolvency proceedings. The implementation of these requirementswith respect to derivatives, as well as regulations under the Dodd-Frank Act regarding clearing, mandatorytrading and margining of other derivatives, may increase the costs and risks to the Fund of trading in theseinstruments and, as a result, may affect returns to investors in the Fund.

• Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund iscommitted to buy may decline below the price of the securities the Fund has sold. These transactions mayinvolve leverage.

• Emerging Markets Risk — Emerging markets are riskier than more developed markets because they tend todevelop unevenly and may never fully develop. Investments in emerging markets may be consideredspeculative. Emerging markets are more likely to experience hyperinflation and currency devaluations, whichadversely affect returns to U.S. investors. In addition, many emerging securities markets have far lower tradingvolumes and less liquidity than developed markets.

• Foreign Securities Risk — Foreign investments often involve special risks not present in U.S. investmentsthat can increase the chances that the Fund will lose money. These risks include:

• The Fund generally holds its foreign securities and cash in foreign banks and securities depositories,which may be recently organized or new to the foreign custody business and may be subject to onlylimited or no regulatory oversight.

• Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.

• The economies of certain foreign markets may not compare favorably with the economy of the UnitedStates with respect to such issues as growth of gross national product, reinvestment of capital, resourcesand balance of payments position.

• The governments of certain countries may prohibit or impose substantial restrictions on foreigninvestments in their capital markets or in certain industries.

• Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale ofsecurities to the same extent as does the United States and may not have laws to protect investors that arecomparable to U.S. securities laws.

• Settlement and clearance procedures in certain foreign markets may result in delays in payment for ordelivery of securities not typically associated with settlement and clearance of U.S. investments.

• High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfoliosecurities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund,including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities andon reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/ordistribution to shareholders of higher capital gains or losses as compared to a fund with less active tradingpolicies. These effects of higher than normal portfolio turnover may adversely affect Fund performance. Inaddition, investment in mortgage dollar rolls and participation in TBA transactions may significantly increasethe Fund’s portfolio turnover rate. A TBA transaction is a method of trading mortgage-backed securities where

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the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, andprice at the time the contract is entered into but the mortgage-backed securities are delivered in the future,generally 30 days later.

• Illiquid Investments Risk — The Fund may invest up to an aggregate amount of 15% of its net assets inilliquid investments. An illiquid investment is any investment that the Fund reasonably expects cannot be soldor disposed of in current market conditions in seven calendar days or less without the sale or dispositionsignificantly changing the market value of the investment. The Fund’s illiquid investments may reduce thereturns of the Fund because it may be difficult to sell the illiquid investments at an advantageous time or price.An investment may be illiquid due to, among other things, the reduced number and capacity of traditionalmarket participants to make a market in fixed-income securities or the lack of an active trading market. To theextent that the Fund’s principal investment strategies involve derivatives or securities with substantial marketand/or credit risk, the Fund will tend to have the greatest exposure to the risks associated with illiquidinvestments. Liquid investments may become illiquid after purchase by the Fund, particularly during periodsof market turmoil. Illiquid investments may be harder to value, especially in changing markets, and if the Fundis forced to sell these investments to meet redemption requests or for other cash needs, the Fund may suffer aloss. This may be magnified in a rising interest rate environment or other circumstances where investorredemptions from fixed-income mutual funds may be higher than normal. In addition, when there is illiquidityin the market for certain securities, the Fund, due to limitations on illiquid investments, may be subject topurchase and sale restrictions.

• Junk Bonds Risk — Although junk bonds generally pay higher rates of interest than investment grade bonds,junk bonds are high risk investments that are considered speculative and may cause income and principallosses for the Fund.

• Leverage Risk — Some transactions may give rise to a form of economic leverage. These transactions mayinclude, among others, derivatives, and may expose the Fund to greater risk and increase its costs. The use ofleverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so tosatisfy its obligations or to meet any required asset segregation requirements. Increases and decreases in thevalue of the Fund’s portfolio will be magnified when the Fund uses leverage.

• Market Risk and Selection Risk —Market risk is the risk that one or more markets in which the Fund investswill go down in value, including the possibility that the markets will go down sharply and unpredictably. Thevalue of a security or other asset may decline due to changes in general market conditions, economic trends orevents that are not specifically related to the issuer of the security or other asset, or factors that affect aparticular issuer or issuers, exchange, country, group of countries, region, market, industry, group ofindustries, sector or asset class. Local, regional or global events such as war, acts of terrorism, the spread ofinfectious illness or other public health issue, recessions, or other events could have a significant impact on theFund and its investments. Selection risk is the risk that the securities selected by Fund management willunderperform the markets, the relevant indices or the securities selected by other funds with similar investmentobjectives and investment strategies. This means you may lose money.

• Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in“pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- andasset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities alsoare subject to risk of default on the underlying mortgage or asset, particularly during periods of economicdownturn. Small movements in interest rates (both increases and decreases) may quickly and significantlyreduce the value of certain mortgage-backed securities.

• Repurchase Agreements and Purchase and Sale Contracts Risk — If the other party to a repurchaseagreement or purchase and sale contract defaults on its obligation under the agreement, the Fund may sufferdelays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to

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repurchase the security in either situation and the market value of the security declines, the Fund may losemoney.

• Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities heldby the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment.Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timelymanner or at all. The Fund could lose money if it is unable to recover the securities and the value of thecollateral held by the Fund, including the value of the investments made with cash collateral, is less than thevalue of the securities. These events could also trigger adverse tax consequences to the Fund.

• U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times ofissuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported byvarying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. Noassurance can be given that the U.S. Government will provide financial support to its agencies and authoritiesif it is not obligated by law to do so.

The section of the Fund’s Prospectus entitled “Details About the Funds — How Each Fund Invests — LowDuration Fund — Principal Investment Strategies” is deleted in its entirety and replaced with thefollowing:

Principal Investment Strategies

The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio durationthat is between 0 and 3 years. Investment grade bonds are bonds rated in the four highest categories by at leastone of the major rating agencies or determined by the management team to be of similar quality. Generally, thehigher the rating of a bond, the higher the likelihood that interest and principal payments will be made on time.

The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fundmay invest up to 20% of its assets in non-investment grade bonds (commonly called “high yield” or “junkbonds”). The Low Duration Fund may also invest up to 35% of its assets in assets of foreign issuers, of which10% (as a percentage of the Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the LowDuration Fund’s assets may be exposed to non-US currency risk. A bond of a foreign issuer, including anemerging market issuer, will not count toward the 10% limit on non-US currency exposure if the bond is either(i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The Low DurationFund may also invest up to 5% of its assets in convertible securities with a minimum rating of B. Split ratedbonds will be considered to have the higher credit rating. Split rated bonds are bonds that receive different ratingsfrom two or more rating agencies.

The management team evaluates sectors of the bond market and individual securities within these sectors. Themanagement team selects bonds from several sectors including: U.S. Treasuries and agency securities,commercial and residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”),asset-backed securities and corporate bonds. Mortgage-backed securities are asset-backed securities based on aparticular type of asset, a mortgage. There is a wide variety of mortgage-backed securities involving commercialor residential, fixed rate or adjustable rate mortgages and mortgages issued by banks or government agencies.CMOs are bonds that are backed by cash flows from pools of mortgages. CMOs may have multiple classes withdifferent payment rights and protections. Asset-backed securities are bonds that are backed by a pool of assets,usually loans such as installment sale contracts or credit card receivables.

The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter intocredit default swaps and interest rate or foreign currency transactions, including swaps (collectively, commonlyknown as derivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhancereturns. The Low Duration Fund may seek to obtain market exposure to the securities in which it primarily

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invests by entering into a series of purchase and sale contracts or by using other investment techniques (such asreverse repurchase agreements and mortgage dollar rolls).


The section of the Fund’s Prospectus entitled “Details About the Funds — Investment Risks — PrincipalRisks of Investing in a Fund” is deleted in its entirety and replaced with the following:

Principal Risks of Investing in a Fund

• Bank Loan Risk (High Yield Fund) — The market for bank loans may not be highly liquid and the Fund mayhave difficulty selling them. These investments expose the Fund to the credit risk of both the financialinstitution and the underlying borrower.

• Borrowing Risk (Low Duration Fund and Core Bond Fund) — Borrowing may exaggerate changes in thenet asset value of Fund shares and in the return on the Fund’s portfolio. Borrowing will cost the Fund interestexpense and other fees. The costs of borrowing may reduce the Fund’s return. Borrowing may cause the Fundto liquidate positions when it may not be advantageous to do so to satisfy its obligations.

• Collateralized Bond Obligation Risk (High Yield Fund) — The pool of high yield securities underlyingcollateralized bond obligations is typically separated into groupings called tranches representing differentdegrees of credit quality. The higher quality tranches have greater degrees of protection and pay lower interestrates. The lower tranches, with greater risk, pay higher interest rates.

• Convertible Securities Risk (High Yield Fund) — The market value of a convertible security performs likethat of a regular debt security; that is, if market interest rates rise, the value of a convertible security usuallyfalls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest ordividends when due, and their market value may change based on changes in the issuer’s credit rating or themarket’s perception of the issuer’s creditworthiness. Since it derives a portion of its value from the commonstock into which it may be converted, a convertible security is also subject to the same types of market andissuer risks that apply to the underlying common stock.

• Debt Securities Risk — Debt securities, such as bonds, involve interest rate risk, credit risk, extension risk,and prepayment risk, among other things.

Interest Rate Risk — The market value of bonds and other fixed-income securities changes in response tointerest rate changes and other factors. Interest rate risk is the risk that prices of bonds and other fixed-incomesecurities will increase as interest rates fall and decrease as interest rates rise.

The Fund may be subject to a greater risk of rising interest rates due to the current period of historically lowrates. For example, if interest rates increase by 1%, assuming a current portfolio duration of ten years, and allother factors being equal, the value of the Fund’s investments would be expected to decrease by 10%. Themagnitude of these fluctuations in the market price of bonds and other fixed-income securities is generallygreater for those securities with longer maturities. Fluctuations in the market price of the Fund’s investmentswill not affect interest income derived from instruments already owned by the Fund, but will be reflected inthe Fund’s net asset value. The Fund may lose money if short-term or long-term interest rates rise sharply in amanner not anticipated by Fund management.

To the extent the Fund invests in debt securities that may be prepaid at the option of the obligor (such asmortgage-backed securities), the sensitivity of such securities to changes in interest rates may increase (to thedetriment of the Fund) when interest rates rise. Moreover, because rates on certain floating rate debt securities

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typically reset only periodically, changes in prevailing interest rates (and particularly sudden and significantchanges) can be expected to cause some fluctuations in the net asset value of the Fund to the extent that itinvests in floating rate debt securities.

These basic principles of bond prices also apply to U.S. Government securities. A security backed by the“full faith and credit” of the U.S. Government is guaranteed only as to its stated interest rate and face value atmaturity, not its current market price. Just like other fixed-income securities, government-guaranteed securitieswill fluctuate in value when interest rates change.

Following the financial crisis that began in 2007, the Federal Reserve has attempted to stabilize the economyand support the economic recovery by keeping the federal funds rate (the interest rate at which depositoryinstitutions lend reserve balances to other depository institutions overnight) at or near zero percent. In addition,as part of its monetary stimulus program known as quantitative easing, the Federal Reserve has purchased onthe open market large quantities of securities issued or guaranteed by the U.S. Government, its agencies orinstrumentalities. As the Federal Reserve “tapers” or reduces the amount of securities it purchases pursuant toquantitative easing, and/or if the Federal Reserve raises the federal funds rate, there is a risk that interest rateswill rise. A general rise in interest rates has the potential to cause investors to move out of fixed-incomesecurities on a large scale, which may increase redemptions from mutual funds that hold large amounts offixed-income securities. Heavy redemptions could cause the Fund to sell assets at inopportune times or at aloss or depressed value and could hurt the Fund’s performance.

During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns.Certain countries have recently experienced negative interest rates on certain fixed-income instruments. Verylow or negative interest rates may magnify interest rate risk. Changing interest rates, including rates that fallbelow zero, may have unpredictable effects on markets, may result in heightened market volatility and maydetract from Fund performance to the extent the Fund is exposed to such interest rates.

Credit Risk — Credit risk refers to the possibility that the issuer of a debt security (i.e., the borrower) will notbe able to make payments of interest and principal when due. Changes in an issuer’s credit rating or themarket’s perception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in thatissuer. The degree of credit risk depends on both the financial condition of the issuer and the terms of theobligation.

Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly thananticipated, causing the value of these obligations to fall. Rising interest rates tend to extend the duration ofsecurities, making them more sensitive to changes in interest rates. The value of longer-term securitiesgenerally changes more in response to changes in interest rates than shorter-term securities. As a result, in aperiod of rising interest rates, securities may exhibit additional volatility and may lose value.

Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quicklythan originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields. Inperiods of falling interest rates, the rate of prepayments tends to increase (as does price fluctuation) asborrowers are motivated to pay off debt and refinance at new lower rates. During such periods, reinvestment ofthe prepayment proceeds by the management team will generally be at lower rates of return than the return onthe assets that were prepaid. Prepayment reduces the yield to maturity and the average life of the security.

• Derivatives Risk — The Fund’s use of derivatives may increase its costs, reduce the Fund’s returns and/orincrease volatility. Derivatives involve significant risks, including:

Volatility Risk — The Fund’s use of derivatives may reduce the Fund’s returns and/or increase volatility.Volatility is defined as the characteristic of a security, an index or a market to fluctuate significantly in pricewithin a short time period. A risk of the Fund’s use of derivatives is that the fluctuations in their values maynot correlate with the overall securities markets.

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Counterparty Risk — Derivatives are also subject to counterparty risk, which is the risk that the other party inthe transaction will not fulfill its contractual obligation.

Market and Illiquidity Risk — Some derivatives are more sensitive to interest rate changes and market pricefluctuations than other securities. The possible lack of a liquid secondary market for derivatives and theresulting inability of the Fund to sell or otherwise close a derivatives position could expose the Fund to lossesand could make derivatives more difficult for the Fund to value accurately. The Fund could also suffer lossesrelated to its derivatives positions as a result of unanticipated market movements, which losses are potentiallyunlimited. Finally, BlackRock may not be able to predict correctly the direction of securities prices, interestrates and other economic factors, which could cause the Fund’s derivatives positions to lose value.

Valuation Risk — Valuation may be more difficult in times of market turmoil since many investors and marketmakers may be reluctant to purchase complex instruments or quote prices for them. Derivatives may alsoexpose the Fund to greater risk and increase its costs. Certain transactions in derivatives involve substantialleverage risk and may expose the Fund to potential losses that exceed the amount originally invested by theFund.

Hedging Risk — When a derivative is used as a hedge against a position that the Fund holds, any lossgenerated by the derivative generally should be substantially offset by gains on the hedged investment, andvice versa. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges aresometimes subject to imperfect matching between the derivative and the underlying security, and there can beno assurance that the Fund’s hedging transactions will be effective. The use of hedging may result in certainadverse tax consequences noted below.

Tax Risk — The federal income tax treatment of a derivative may not be as favorable as a direct investment inan underlying asset and may adversely affect the timing, character and amount of income the Fund realizesfrom its investments. As a result, a larger portion of the Fund’s distributions may be treated as ordinary incomerather than capital gains. In addition, certain derivatives are subject to mark-to-market or straddle provisions ofthe Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). If such provisions areapplicable, there could be an increase (or decrease) in the amount of taxable dividends paid by the Fund. Inaddition, the tax treatment of certain derivatives, such as swaps, is unsettled and may be subject to futurelegislation, regulation or administrative pronouncements issued by the Internal Revenue Service (the “IRS”).

Regulatory Risk — Derivative contracts, including, without limitation, swaps, currency forwards andnon-deliverable forwards, are subject to regulation under the Dodd-Frank Wall Street Reform and ConsumerProtection Act (the “Dodd-Frank Act”) in the United States and under comparable regimes in Europe, Asia andother non-U.S. jurisdictions. Under the Dodd-Frank Act, certain derivatives are subject to margin requirementsand swap dealers are required to collect margin from the Fund with respect to such derivatives. Specifically,regulations are now in effect that require swap dealers to post and collect variation margin (comprised ofspecified liquid instruments and subject to a required haircut) in connection with trading of over the counter(“OTC”) swaps with the Fund. Shares of investment companies (other than certain money market funds) maynot be posted as collateral under these regulations. Requirements for posting of initial margin in connectionwith OTC swaps will be phased-in through at least 2021. In addition, regulations adopted by global prudentialregulators that are now in effect require certain bank-regulated counterparties and certain of their affiliates toinclude in certain financial contracts, including many derivatives contracts, terms that delay or restrict therights of counterparties, such as the Fund, to terminate such contracts, foreclose upon collateral, exercise otherdefault rights or restrict transfers of credit support in the event that the counterparty and/or its affiliates aresubject to certain types of resolution or insolvency proceedings. The implementation of these requirementswith respect to derivatives, as well as regulations under the Dodd-Frank Act regarding clearing, mandatorytrading and margining of other derivatives, may increase the costs and risks to the Fund of trading in theseinstruments and, as a result, may affect returns to investors in the Fund.

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Future regulatory developments may impact the Fund’s ability to invest or remain invested in certainderivatives. Legislation or regulation may also change the way in which the Fund itself is regulated.BlackRock cannot predict the effects of any new governmental regulation that may be implemented on theability of the Fund to use swaps or any other financial derivative product, and there can be no assurance thatany new governmental regulation will not adversely affect the Fund’s ability to achieve its investmentobjective.

Risks Specific to Certain Derivatives Used by the Fund

Swaps — Swap agreements, including total return swaps that may be referred to as contracts for difference,are two-party contracts entered into for periods ranging from a few weeks to more than one year. In astandard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return)earned or realized on particular predetermined investments or instruments, which can be adjusted for aninterest factor. Swap agreements involve the risk that the party with whom the Fund has entered into theswap will default on its obligation to pay the Fund and the risk that the Fund will not be able to meet itsobligations to pay the other party to the agreement. Swap agreements may also involve the risk that there isan imperfect correlation between the return on the Fund’s obligation to its counterparty and the return on thereferenced asset. In addition, swap agreements are subject to market and illiquidity risk, leverage risk andhedging risk.

Credit Default Swaps — Credit default swaps may have as reference obligations one or more securities thatare not currently held by the Fund. The protection “buyer” may be obligated to pay the protection “seller” anup-front payment or a periodic stream of payments over the term of the contract, provided generally that nocredit event on a reference obligation has occurred. Credit default swaps involve special risks in addition tothose mentioned above because they are difficult to value, are highly susceptible to illiquid investments riskand credit risk, and generally pay a return to the party that has paid the premium only in the event of anactual default by the issuer of the underlying obligation (as opposed to a credit downgrade or otherindication of financial difficulty).

Forward Foreign Currency Exchange Contracts — Forward foreign currency exchange transactions areOTC contracts to purchase or sell a specified amount of a specified currency or multinational currency unitat a price and future date set at the time of the contract. Forward foreign currency exchange contracts do noteliminate fluctuations in the value of non-U.S. securities but rather allow the Fund to establish a fixed rateof exchange for a future point in time. This strategy can have the effect of reducing returns and minimizingopportunities for gain.

Futures — Futures are standardized, exchange-traded contracts that obligate a purchaser to take delivery,and a seller to make delivery, of a specific amount of an asset at a specified future date at a specified price.The primary risks associated with the use of futures contracts and options are (a) the imperfect correlationbetween the change in market value of the instruments held by the Fund and the price of the futures contractor option; (b) the possible lack of a liquid secondary market for a futures contract and the resulting inabilityto close a futures contract when desired; (c) losses caused by unanticipated market movements, which arepotentially unlimited; (d) the investment adviser’s inability to predict correctly the direction of securitiesprices, interest rates, currency exchange rates and other economic factors; and (e) the possibility that thecounterparty will default in the performance of its obligations.

Options — An option is an agreement that, for a premium payment or fee, gives the option holder (thepurchaser) the right but not the obligation to buy (a “call option”) or sell (a “put option”) the underlyingasset (or settle for cash in an amount based on an underlying asset, rate, or index) at a specified price (the“exercise price”) during a period of time or on a specified date. Investments in options are consideredspeculative. When the Fund purchases an option, it may lose the total premium paid for it if the price of theunderlying security or other assets decreased, remained the same or failed to increase to a level at or beyondthe exercise price (in the case of a call option) or increased, remained the same or failed to decrease to alevel at or below the exercise price (in the case of a put option). If a put or call option purchased by the Fundwere permitted to expire without being sold or exercised, its premium would represent a loss to the Fund. To

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the extent that the Fund writes or sells an option, if the decline or increase in the underlying asset issignificantly below or above the exercise price of the written option, the Fund could experience a substantialloss.

• Distressed Securities Risk (High Yield Fund) — Distressed securities are speculative and involve substantialrisks in addition to the risks of investing in junk bonds. The Fund will generally not receive interest paymentson the distressed securities and may incur costs to protect its investment. In addition, distressed securitiesinvolve the substantial risk that principal will not be repaid. These securities may present a substantial risk ofdefault or may be in default at the time of investment. The Fund may incur additional expenses to the extent itis required to seek recovery upon a default in the payment of principal of or interest on its portfolio holdings.In any reorganization or liquidation proceeding relating to a portfolio company, the Fund may lose its entireinvestment or may be required to accept cash or securities with a value less than its original investment.Distressed securities and any securities received in an exchange for such securities may be subject torestrictions on resale.

• Dollar Rolls Risk — A dollar roll transaction involves a sale by the Fund of a mortgage-backed, U.S. Treasuryor other security (as permitted by the Fund’s investment strategies) concurrently with an agreement by theFund to repurchase a similar security at a later date at an agreed-upon price. The market value of the securitiesthe Fund is required to purchase may decline below the agreed upon repurchase price of those securities. If thebroker/dealer to whom the Fund sells securities becomes insolvent, the Fund’s right to purchase or repurchasesecurities may be restricted. Successful use of dollar rolls may depend upon the adviser’s ability to correctlypredict interest rates and prepayments, depending on the underlying security. There is no assurance that dollarrolls can be successfully employed.

• Emerging Markets Risk — The risks of foreign investments are usually much greater for emerging markets.Investments in emerging markets may be considered speculative. Emerging markets may include those incountries considered emerging or developing by the World Bank, the International Finance Corporation or theUnited Nations. Emerging markets are riskier than more developed markets because they tend to developunevenly and may never fully develop. They are more likely to experience hyperinflation and currencydevaluations, which adversely affect returns to U.S. investors. In addition, many emerging markets have farlower trading volumes and less liquidity than developed markets. Since these markets are often small, theymay be more likely to suffer sharp and frequent price changes or long-term price depression because ofadverse publicity, investor perceptions or the actions of a few large investors. In addition, traditional measuresof investment value used in the United States, such as price to earnings ratios, may not apply to certain smallmarkets. Also, there may be less publicly available information about issuers in emerging markets than wouldbe available about issuers in more developed capital markets, and such issuers may not be subject toaccounting, auditing and financial reporting standards and requirements comparable to those to which U.S.companies are subject.

Many emerging markets have histories of political instability and abrupt changes in policies. As a result, theirgovernments are more likely to take actions that are hostile or detrimental to private enterprise or foreigninvestment than those of more developed countries, including expropriation of assets, confiscatory taxation,high rates of inflation or unfavorable diplomatic developments. In the past, governments of such nations haveexpropriated substantial amounts of private property, and most claims of the property owners have never beenfully settled. There is no assurance that such expropriations will not reoccur. In such an event, it is possiblethat the Fund could lose the entire value of its investments in the affected market. Some countries havepervasive corruption and crime that may hinder investments. Certain emerging markets may also face othersignificant internal or external risks, including the risk of war, and ethnic, religious and racial conflicts. Inaddition, governments in many emerging market countries participate to a significant degree in theireconomies and securities markets, which may impair investment and economic growth. National policies thatmay limit the Fund’s investment opportunities include restrictions on investment in issuers or industriesdeemed sensitive to national interests.

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Emerging markets may also have differing legal systems and the existence or possible imposition of exchangecontrols, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to suchinvestments. Sometimes, they may lack or be in the relatively early development of legal structures governingprivate and foreign investments and private property. Many emerging markets do not have income tax treatieswith the United States, and as a result, investments by the Fund may be subject to higher withholding taxes insuch countries. In addition, some countries with emerging markets may impose differential capital gains taxeson foreign investors.

Practices in relation to settlement of securities transactions in emerging markets involve higher risks than thosein developed markets, in part because the Fund will need to use brokers and counterparties that are less wellcapitalized, and custody and registration of assets in some countries may be unreliable. The possibility offraud, negligence, undue influence being exerted by the issuer or refusal to recognize that ownership exists insome emerging markets, and, along with other factors, could result in ownership registration being completelylost. The Fund would absorb any loss resulting from such registration problems and may have no successfulclaim for compensation. In addition, communications between the United States and emerging marketcountries may be unreliable, increasing the risk of delayed settlements or losses of security certificates.

• Foreign Securities Risk — Securities traded in foreign markets have often (though not always) performeddifferently from securities traded in the United States. However, such investments often involve special risksnot present in U.S. investments that can increase the chances that the Fund will lose money. In particular, theFund is subject to the risk that because there may be fewer investors on foreign exchanges and a smallernumber of securities traded each day, it may be more difficult for the Fund to buy and sell securities on thoseexchanges. In addition, prices of foreign securities may go up and down more than prices of securities tradedin the United States.

Certain Risks of Holding Fund Assets Outside the United States — The Fund generally holds its foreignsecurities and cash in foreign banks and securities depositories. Some foreign banks and securities depositoriesmay be recently organized or new to the foreign custody business. In addition, there may be limited or noregulatory oversight of their operations. Also, the laws of certain countries limit the Fund’s ability to recoverits assets if a foreign bank, depository or issuer of a security, or any of their agents, goes bankrupt. In addition,it is often more expensive for the Fund to buy, sell and hold securities in certain foreign markets than in theUnited States. The increased expense of investing in foreign markets reduces the amount the Fund can earn onits investments and typically results in a higher operating expense ratio for the Fund than for investmentcompanies invested only in the United States.

Currency Risk — Securities and other instruments in which the Fund invests may be denominated or quoted incurrencies other than the U.S. dollar. For this reason, changes in foreign currency exchange rates can affect thevalue of the Fund’s portfolio.

Generally, when the U.S. dollar rises in value against a foreign currency, a security denominated in thatcurrency loses value because the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollardecreases in value against a foreign currency, a security denominated in that currency gains value because thecurrency is worth more U.S. dollars. This risk, generally known as “currency risk,” means that a strongU.S. dollar will reduce returns for U.S. investors while a weak U.S. dollar will increase those returns.

Foreign Economy Risk — The economies of certain foreign markets may not compare favorably with theeconomy of the United States with respect to such issues as growth of gross national product, reinvestment ofcapital, resources and balance of payments position. Certain foreign economies may rely heavily on particularindustries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economicsanctions against a particular country or countries, changes in international trading patterns, trade barriers andother protectionist or retaliatory measures. Investments in foreign markets may also be adversely affected bygovernmental actions such as the imposition of capital controls, nationalization of companies or industries,

- 13 -

expropriation of assets or the imposition of punitive taxes. In addition, the governments of certain countriesmay prohibit or impose substantial restrictions on foreign investments in their capital markets or in certainindustries. Any of these actions could severely affect securities prices or impair the Fund’s ability to purchaseor sell foreign securities or transfer the Fund’s assets or income back into the United States, or otherwiseadversely affect the Fund’s operations.

Other potential foreign market risks include foreign exchange controls, difficulties in pricing securities, defaultson foreign government securities, difficulties in enforcing legal judgments in foreign courts and political andsocial instability. Diplomatic and political developments, including rapid and adverse political changes, socialinstability, regional conflicts, terrorism and war, could affect the economies, industries and securities andcurrency markets, and the value of the Fund’s investments, in non-U.S. countries. These factors are extremelydifficult, if not impossible, to predict and take into account with respect to the Fund’s investments.

Governmental Supervision and Regulation/Accounting Standards — Many foreign governments do notsupervise and regulate stock exchanges, brokers and the sale of securities to the same extent as suchregulations exist in the United States. They also may not have laws to protect investors that are comparable toU.S. securities laws. For example, some foreign countries may have no laws or rules against insider trading.Insider trading occurs when a person buys or sells a company’s securities based on material non-publicinformation about that company. In addition, some countries may have legal systems that may make it difficultfor the Fund to vote proxies, exercise shareholder rights, and pursue legal remedies with respect to its foreigninvestments. Accounting standards in other countries are not necessarily the same as in the United States. Ifthe accounting standards in another country do not require as much detail as U.S. accounting standards, it maybe harder for Fund management to completely and accurately determine a company’s financial condition.

Settlement Risk — Settlement and clearance procedures in certain foreign markets differ significantly fromthose in the United States. Foreign settlement and clearance procedures and trade regulations also may involvecertain risks (such as delays in payment for or delivery of securities) not typically associated with thesettlement of U.S. investments.

At times, settlements in certain foreign countries have not kept pace with the number of securities transactions.These problems may make it difficult for the Fund to carry out transactions. If the Fund cannot settle or isdelayed in settling a purchase of securities, it may miss attractive investment opportunities and certain of itsassets may be uninvested with no return earned thereon for some period. If the Fund cannot settle or is delayedin settling a sale of securities, it may lose money if the value of the security then declines or, if it hascontracted to sell the security to another party, the Fund could be liable for any losses incurred.

European Economic Risk (High Yield Fund) — The European financial markets have recently experiencedvolatility and adverse trends due to concerns about economic downturns in, or rising government debt levelsof, several European countries. These events may spread to other countries in Europe. These events may affectthe value and liquidity of certain of the Fund’s investments.

Responses to the financial problems by European governments, central banks and others, including austeritymeasures and reforms, may not work, may result in social unrest and may limit future growth and economicrecovery or have other unintended consequences. Further defaults or restructurings by governments and othersof their debt could have additional adverse effects on economies, financial markets and asset valuations aroundthe world. In addition, the United Kingdom has withdrawn from the European Union, and one or more othercountries may withdraw from the European Union and/or abandon the Euro, the common currency of theEuropean Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear butcould be significant and far reaching.

• High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfoliosecurities. High portfolio turnover (more than 100%) may result in increased transaction costs to the Fund,

- 14 -

including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities andon reinvestment in other securities. The sale of Fund portfolio securities may result in the realization and/ordistribution to shareholders of higher capital gains or losses as compared to a fund with less active tradingpolicies. These effects of higher than normal portfolio turnover may adversely affect Fund performance. Inaddition, investment in mortgage dollar rolls and participation in TBA transactions may significantly increasethe Fund’s portfolio turnover rate. A TBA transaction is a method of trading mortgage-backed securities wherethe buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, andprice at the time the contract is entered into but the mortgage-backed securities are delivered in the future,generally 30 days later.

• Illiquid Investments Risk — The Fund may invest up to an aggregate amount of 15% of its net assets inilliquid investments. An illiquid investment is any investment that the Fund reasonably expects cannot be soldor disposed of in current market conditions in seven calendar days or less without the sale or dispositionsignificantly changing the market value of the investment. The Fund’s illiquid investments may reduce thereturns of the Fund because it may be difficult to sell the illiquid investments at an advantageous time or price.An investment may be illiquid due to, among other things, the reduced number and capacity of traditionalmarket participants to make a market in fixed-income securities or the lack of an active trading market. To theextent that the Fund’s principal investment strategies involve derivatives or securities with substantial marketand/or credit risk, the Fund will tend to have the greatest exposure to the risks associated with illiquidinvestments. Liquid investments may become illiquid after purchase by the Fund, particularly during periodsof market turmoil. Illiquid investments may be harder to value, especially in changing markets, and if the Fundis forced to sell these investments to meet redemption requests or for other cash needs, the Fund may suffer aloss. This may be magnified in a rising interest rate environment or other circumstances where investorredemptions from fixed-income mutual funds may be higher than normal. In addition, when there is illiquidityin the market for certain securities, the Fund, due to limitations on illiquid investments, may be subject topurchase and sale restrictions.

• Junk Bonds Risk (High Yield Fund and Low Duration Fund) — Although junk bonds generally pay higherrates of interest than investment grade bonds, junk bonds are high risk investments that are considered speculativeand may cause income and principal losses for the Fund. The major risks of junk bond investments include:

• Junk bonds may be issued by less creditworthy issuers. Issuers of junk bonds may have a larger amount ofoutstanding debt relative to their assets than issuers of investment grade bonds. In the event of an issuer’sbankruptcy, claims of other creditors may have priority over the claims of junk bond holders, leaving fewor no assets available to repay junk bond holders.

• Prices of junk bonds are subject to extreme price fluctuations. Adverse changes in an issuer’s industry andgeneral economic conditions may have a greater impact on the prices of junk bonds than on other higherrated fixed-income securities.

• Issuers of junk bonds may be unable to meet their interest or principal payment obligations because of aneconomic downturn, specific issuer developments, or the unavailability of additional financing.

• Junk bonds frequently have redemption features that permit an issuer to repurchase the security from theFund before it matures. If the issuer redeems junk bonds, the Fund may have to invest the proceeds inbonds with lower yields and may lose income.

• Junk bonds may be less liquid than higher rated fixed-income securities, even under normal economicconditions. There are fewer dealers in the junk bond market, and there may be significant differences inthe prices quoted for junk bonds by the dealers. Because they are less liquid than higher rated fixed-income securities, judgment may play a greater role in valuing junk bonds than is the case with securitiestrading in a more liquid market.

- 15 -

• The Fund may incur expenses to the extent necessary to seek recovery upon default or to negotiate newterms with a defaulting issuer.

The credit rating of a high yield security does not necessarily address its market value risk. Ratings and marketvalue may change from time to time, positively or negatively, to reflect new developments regarding theissuer.

• Leverage Risk — Some transactions may give rise to a form of economic leverage. These transactions mayinclude, among others, derivatives, and may expose the Fund to greater risk and increase its costs. As anopen-end investment company registered with the SEC, the Fund is subject to the federal securities laws,including the Investment Company Act of 1940, as amended (the “Investment Company Act”), the rulesthereunder, and various SEC and SEC staff interpretive positions. In accordance with these laws, rules andpositions, the Fund must “set aside” liquid assets (often referred to as “asset segregation”), or engage in otherSEC- or staff-approved measures, to “cover” open positions with respect to certain kinds of instruments. Theuse of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do soto satisfy its obligations or to meet any required asset segregation requirements. Increases and decreases in thevalue of the Fund’s portfolio will be magnified when the Fund uses leverage.

• Market Risk and Selection Risk —Market risk is the risk that one or more markets in which the Fund investswill go down in value, including the possibility that the markets will go down sharply and unpredictably. Thevalue of a security or other asset may decline due to changes in general market conditions, economic trends orevents that are not specifically related to the issuer of the security or other asset, or factors that affect aparticular issuer or issuers, exchange, country, group of countries, region, market, industry, group ofindustries, sector or asset class. Local, regional or global events such as war, acts of terrorism, the spread ofinfectious illness or other public health issue, recessions, or other events could have a significant impact on theFund and its investments. Selection risk is the risk that the securities selected by Fund management willunderperform the markets, the relevant indices or the securities selected by other funds with similar investmentobjectives and investment strategies. This means you may lose money.

• Mezzanine Securities Risk (High Yield Fund) — Mezzanine securities generally are rated below investmentgrade and frequently are unrated and present many of the same risks as senior loans, second lien loans andnon-investment grade bonds. However, unlike senior loans and second lien loans, mezzanine securities are nota senior or secondary secured obligation of the related borrower. They typically are the most subordinated debtobligation in an issuer’s capital structure. Mezzanine securities also may often be unsecured. Mezzaninesecurities therefore are subject to the additional risk that the cash flow of the related borrower and the propertysecuring the loan may be insufficient to repay the scheduled obligation after giving effect to any seniorobligations of the related borrower. Mezzanine securities are also expected to be a highly illiquid investment.Mezzanine securities will be subject to certain additional risks to the extent that such loans may not beprotected by financial covenants or limitations upon additional indebtedness. Investment in mezzaninesecurities is a highly specialized investment practice that depends more heavily on independent credit analysisthan investments in other types of debt obligations.

• Mortgage- and Asset-Backed Securities Risks — Mortgage-backed securities (residential and commercial) andasset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans orreceivables held in trust. Although asset-backed and commercial mortgage-backed securities (“CMBS”)generally experience less prepayment than residential mortgage-backed securities, mortgage-backed andasset-backed securities, like traditional fixed-income securities, are subject to credit, interest rate, prepayment andextension risks.

Small movements in interest rates (both increases and decreases) may quickly and significantly reduce thevalue of certain mortgage-backed securities. The Fund’s investments in asset-backed securities are subject torisks similar to those associated with mortgage-related securities, as well as additional risks associated with the

- 16 -

nature of the assets and the servicing of those assets. These securities also are subject to the risk of default onthe underlying mortgages or assets, particularly during periods of economic downturn. Certain CMBS areissued in several classes with different levels of yield and credit protection. The Fund’s investments in CMBSwith several classes may be in the lower classes that have greater risks than the higher classes, includinggreater interest rate, credit and prepayment risks.

Mortgage-backed securities may be either pass-through securities or collateralized mortgage obligations(“CMOs”). Pass-through securities represent a right to receive principal and interest payments collected on apool of mortgages, which are passed through to security holders. CMOs are created by dividing the principaland interest payments collected on a pool of mortgages into several revenue streams (“tranches”) withdifferent priority rights to portions of the underlying mortgage payments. Certain CMO tranches may representa right to receive interest only (“IOs”), principal only (“POs”) or an amount that remains after floating-ratetranches are paid (an “inverse floater”). These securities are frequently referred to as “mortgage derivatives”and may be extremely sensitive to changes in interest rates. Interest rates on inverse floaters, for example, varyinversely with a short-term floating rate (which may be reset periodically). Interest rates on inverse floaterswill decrease when short-term rates increase, and will increase when short-term rates decrease. Thesesecurities have the effect of providing a degree of investment leverage. In response to changes in marketinterest rates or other market conditions, the value of an inverse floater may increase or decrease at a multipleof the increase or decrease in the value of the underlying securities. If the Fund invests in CMO tranches(including CMO tranches issued by government agencies) and interest rates move in a manner not anticipatedby Fund management, it is possible that the Fund could lose all or substantially all of its investment. Certainmortgage-backed securities in which the Fund may invest may also provide a degree of investment leverage,which could cause the Fund to lose all or substantially all of its investment.

The mortgage market in the United States has experienced difficulties that may adversely affect theperformance and market value of certain of the Fund’s mortgage-related investments. Delinquencies and losseson mortgage loans (including subprime and second-lien mortgage loans) generally have increased and maycontinue to increase, and a decline in or flattening of real estate values (as has been experienced and maycontinue to be experienced in many housing markets) may exacerbate such delinquencies and losses. Also, anumber of mortgage loan originators have experienced serious financial difficulties or bankruptcy. Reducedinvestor demand for mortgage loans and mortgage-related securities and increased investor yield requirementshave caused limited liquidity in the secondary market for mortgage-related securities, which can adverselyaffect the market value of mortgage-related securities. It is possible that such limited liquidity in suchsecondary markets could continue or worsen.

Asset-backed securities entail certain risks not presented by mortgage-backed securities, including the risk thatin certain states it may be difficult to perfect the liens securing the collateral backing certain asset-backedsecurities. In addition, certain asset-backed securities are based on loans that are unsecured, which means thatthere is no collateral to seize if the underlying borrower defaults.

• Preferred Securities Risk (High Yield Fund) — Preferred securities may pay fixed or adjustable rates ofreturn. Preferred securities are subject to issuer-specific and market risks applicable generally to equitysecurities. In addition, a company’s preferred securities generally pay dividends only after the company makesrequired payments to holders of its bonds and other debt. For this reason, the value of preferred securities willusually react more strongly than bonds and other debt to actual or perceived changes in the company’sfinancial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adversedevelopments than preferred securities of larger companies.

• Repurchase Agreements and Purchase and Sale Contracts Risk — If the other party to a repurchase agreementor purchase and sale contract defaults on its obligation under the agreement, the Fund may suffer delays and incurcosts or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security ineither situation and the market value of the security declines, the Fund may lose money.

- 17 -

• Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities heldby the Fund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment.Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timelymanner or at all. The Fund could lose money if it is unable to recover the securities and the value of thecollateral held by the Fund, including the value of the investments made with cash collateral, is less than thevalue of the securities. These events could also trigger adverse tax consequences to the Fund.

• U.S. Government Issuer Risk (Low Duration Fund and Core Bond Fund) — Treasury obligations may differin their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Governmentagencies and authorities are supported by varying degrees of credit but generally are not backed by the fullfaith and credit of the U.S. Government. No assurance can be given that the U.S. Government will providefinancial support to its agencies and authorities if it is not obligated by law to do so.


PR2-LOWD-PRI-0420SUP

- 18 -

BlackRock Advantage U.S. Total Market Fund,Inc.

BlackRock Allocation Target SharesBATS: Series A PortfolioBATS: Series C PortfolioBATS: Series E PortfolioBATS: Series M PortfolioBATS: Series P PortfolioBATS: Series S Portfolio

BlackRock Asian Dragon Fund, Inc.


BlackRock Basic Value Fund, Inc.


BlackRock California Municipal Series TrustBlackRock California Municipal OpportunitiesFund

BlackRock Capital Appreciation Fund, Inc.

BlackRock Emerging Markets Fund, Inc.

BlackRock Equity Dividend Fund

BlackRock EuroFund

BlackRock Financial Institutions Series TrustBlackRock Summit Cash Reserves Fund

BlackRock FundsSM

BlackRock Commodity Strategies FundBlackRock Emerging Markets Equity StrategiesFundBlackRock Energy Opportunities FundBlackRock Exchange PortfolioBlackRock Health Sciences OpportunitiesPortfolioBlackRock High Equity Income FundBlackRock International Dividend FundBlackRock Liquid Environmentally Aware FundBlackRock Mid-Cap Growth Equity PortfolioBlackRock Money Market PortfolioBlackRock Real Estate Securities FundBlackRock Short Obligations FundBlackRock Tactical Opportunities FundBlackRock Technology Opportunities FundBlackRock Total Factor FundiShares Developed Real Estate Index Fund

iShares Edge MSCI Min Vol EAFE Index FundiShares Edge MSCI Min Vol USA Index FundiShares Edge MSCI Multifactor Intl Index FundiShares Edge MSCI Multifactor USA IndexFundiShares Municipal Bond Index FundiShares Russell Mid-Cap Index FundiShares Russell Small/Mid-Cap Index FundiShares Short-Term TIPS Bond Index FundiShares Total U.S. Stock Market Index Fund

BlackRock Funds IIBlackRock 20/80 Target Allocation FundBlackRock 40/60 Target Allocation FundBlackRock 60/40 Target Allocation FundBlackRock 80/20 Target Allocation FundBlackRock Dynamic High Income PortfolioBlackRock Global Dividend PortfolioBlackRock LifePath® Smart Beta RetirementFundBlackRock LifePath® Smart Beta 2025 FundBlackRock LifePath® Smart Beta 2030 FundBlackRock LifePath® Smart Beta 2035 FundBlackRock LifePath® Smart Beta 2040 FundBlackRock LifePath® Smart Beta 2045 FundBlackRock LifePath® Smart Beta 2050 FundBlackRock LifePath® Smart Beta 2055 FundBlackRock LifePath® Smart Beta 2060 FundBlackRock LifePath® Smart Beta 2065 FundBlackRock Managed Income FundBlackRock Multi-Asset Income Portfolio

BlackRock Funds IIIBlackRock Cash Funds: InstitutionalBlackRock Cash Funds: TreasuryBlackRock LifePath® Dynamic RetirementFundBlackRock LifePath® Dynamic 2025 FundBlackRock LifePath® Dynamic 2030 FundBlackRock LifePath® Dynamic 2035 FundBlackRock LifePath® Dynamic 2040 FundBlackRock LifePath® Dynamic 2045 FundBlackRock LifePath® Dynamic 2050 FundBlackRock LifePath® Dynamic 2055 FundBlackRock LifePath® Dynamic 2060 FundBlackRock LifePath® Dynamic 2065 FundBlackRock LifePath® Index Retirement FundBlackRock LifePath® Index 2025 FundBlackRock LifePath® Index 2030 FundBlackRock LifePath® Index 2035 FundBlackRock LifePath® Index 2040 FundBlackRock LifePath® Index 2045 FundBlackRock LifePath® Index 2050 FundBlackRock LifePath® Index 2055 Fund

BlackRock LifePath® Index 2060 FundBlackRock LifePath® Index 2065 FundiShares MSCI Total International Index FundiShares Russell 1000 Large-Cap Index FundiShares S&P 500 Index FundiShares U.S. Aggregate Bond Index Fund

BlackRock Funds IVBlackRock Global Long/Short Credit Fund

BlackRock Funds VBlackRock Core Bond PortfolioBlackRock Credit Strategies Income FundBlackRock Emerging Markets Bond FundBlackRock Emerging Markets FlexibleDynamic Bond PortfolioBlackRock Floating Rate Income PortfolioBlackRock GNMA PortfolioBlackRock High Yield Bond PortfolioBlackRock Inflation Protected Bond PortfolioBlackRock Low Duration Bond PortfolioBlackRock Strategic Income OpportunitiesPortfolioBlackRock U.S. Government Bond Portfolio


BlackRock Index Funds, Inc.iShares MSCI EAFE International Index FundiShares Russell 2000 Small-Cap Index Fund

BlackRock Large Cap Focus Growth Fund, Inc.


BlackRock Latin America Fund, Inc.

BlackRock Liquidity FundsCalifornia Money FundFederal Trust FundFedFundMuniCashMuniFundNew York Money FundTempCashTempFundT-FundTreasury Trust Fund

BlackRock Long-Horizon Equity Fund

BlackRock Mid Cap Dividend Series, Inc.BlackRock Mid Cap Dividend Fund

BlackRock Multi-State Municipal Series TrustBlackRock New Jersey Municipal Bond FundBlackRock New York Municipal OpportunitiesFundBlackRock Pennsylvania Municipal Bond Fund

BlackRock Municipal Bond Fund, Inc.BlackRock High Yield Municipal FundBlackRock National Municipal FundBlackRock Short-Term Municipal Fund

BlackRock Municipal Series TrustBlackRock Strategic Municipal OpportunitiesFund

BlackRock Natural Resources Trust

BlackRock Series Fund, Inc.BlackRock Advantage Large Cap Core PortfolioBlackRock Balanced Capital PortfolioBlackRock Capital Appreciation PortfolioBlackRock Global Allocation PortfolioBlackRock Government Money MarketPortfolio


BlackRock Series, Inc.BlackRock International Fund


BlackRock Variable Series Funds, Inc.BlackRock 60/40 Target Allocation ETF V.I.FundBlackRock Advantage Large Cap Core V.I.FundBlackRock Advantage Large Cap Value V.I.FundBlackRock Advantage U.S. Total Market V.I.FundBlackRock Basic Value V.I. FundBlackRock Capital Appreciation V.I. FundBlackRock Equity Dividend V.I. Fund

BlackRock Global Allocation V.I. FundBlackRock Government Money Market V.I. FundBlackRock International Index V.I. FundBlackRock International V.I. FundBlackRock Large Cap Focus Growth V.I. FundBlackRock Managed Volatility V.I. FundBlackRock S&P 500 Index V.I. FundBlackRock Small Cap Index V.I. Fund


Funds For Institutions SeriesBlackRock Premier Government InstitutionalFundBlackRock Select Treasury StrategiesInstitutional Fund

BlackRock Treasury Strategies InstitutionalFundFFI Government FundFFI Treasury Fund

Managed Account SeriesBlackRock GA Disciplined Volatility EquityFundBlackRock GA Dynamic Equity Fund

Managed Account Series IIBlackRock U.S. Mortgage Portfolio

Ready Assets Government Liquidity Fund

Retirement Series TrustRetirement Reserves Money Fund


Supplement dated March 10, 2020 to the Summary Prospectus(es) and Prospectus(es) of each Fund

The section of each Fund’s Summary Prospectus(es) entitled “Key Facts About [the Fund] — PrincipalRisks of Investing in the Fund,” the section of each Fund’s Prospectus(es) entitled “Fund Overview — KeyFacts About [the Fund] — Principal Risks of Investing in the Fund” and the section of each Fund’sProspectus(es) entitled “Details About the Fund[s] — Investment Risks — Principal Risks of Investing inthe Fund” or “Details About the Fund — Investment Risks — Other Principal Risks of Investing in theFund and/or an Underlying ETF” are amended to delete “Market Risk and Selection Risk” or “MarketRisk”, as applicable, in its entirety and to replace it with the following:

• Market Risk and Selection Risk — Market risk is the risk that one or more markets in which the Fundinvests will go down in value, including the possibility that the markets will go down sharply andunpredictably. The value of a security or other asset may decline due to changes in general marketconditions, economic trends or events that are not specifically related to the issuer of the security orother asset, or factors that affect a particular issuer or issuers, exchange, country, group of countries,region, market, industry, group of industries, sector or asset class. Local, regional or global events suchas war, acts of terrorism, the spread of infectious illness or other public health issue, recessions, orother events could have a significant impact on the Fund and its investments. Selection risk is the riskthat the securities selected by Fund management will underperform the markets, the relevant indices orthe securities selected by other funds with similar investment objectives and investment strategies. Thismeans you may lose money.


PR2-CORONA2-0320SUP


(the “Fund”)

Supplement dated February 21, 2020 to the Summary Prospectuses of the Fund,each dated February 6, 2020, and the Prospectuses of the Fund,

each dated January 28, 2020, as amended to date


The third sentence of the second paragraph in the section of each Summary Prospectus entitled “Key FactsAbout BlackRock Low Duration Bond Portfolio—Principal Investment Strategies of the Fund” and thesection of each Prospectus entitled “Fund Overview—Key Facts About BlackRock Low Duration BondPortfolio—Principal Investment Strategies of the Fund” is deleted in its entirety and replaced with thefollowing:

The Low Duration Fund may also invest up to 35% of its assets in assets of foreign issuers, of which 10% (as apercentage of the Fund’s assets) may be invested in emerging markets issuers.

The third sentence of the second paragraph in the section of each Prospectus entitled “Details About theFunds—How Each Fund Invests—Low Duration Fund—Principal Investment Strategies” is deleted in itsentirety and replaced with the following:

The Low Duration Fund may also invest up to 35% of its assets in assets of foreign issuers, of which 10% (as apercentage of the Fund’s assets) may be invested in emerging markets issuers.


PR2SAI-LOWD-0220SUP

JANUARY 28, 2020

Prospectus

BlackRock Funds V | Investor A1 and C1, C2 and C3 Shares

• BlackRock High Yield Bond PortfolioInvestor C1: BHYEX

• BlackRock Low Duration Bond PortfolioInvestor A1: CMGAX • Investor C2: CLDCX • Investor C3: BLDFX

Effective on or about the close of business on February 24, 2020, all of the issued and outstanding Investor C1 Shares of BlackRockHigh Yield Bond Portfolio (the “High Yield Fund”) and all of the issued and outstanding Investor C2 and C3 Shares of BlackRock LowDuration Bond Portfolio (“the Low Duration Fund”) will be converted into Investor A Shares of the High Yield Fund and Low DurationFund, respectively.

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of eachFund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from BlackRock orfrom your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you willbe notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts directly with BlackRock, you can call(800) 441-7762 to inform BlackRock that you wish to continue receiving paper copies of your shareholder reports. If you hold accountsthrough a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financialintermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financialintermediaries may offer this service. Your election to receive reports in paper will apply to all funds advised by BlackRock Advisors, LLC,BlackRock Fund Advisors or their affiliates, or all funds held with your financial intermediary, as applicable.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take anyaction. You may elect to receive electronic delivery of shareholder reports and other communications by: (i) accessing the BlackRockwebsite at www.blackrock.com/edelivery and logging into your accounts, if you hold accounts directly with BlackRock, or (ii) contactingyour financial intermediary, if you hold accounts through a financial intermediary. Please note that not all financial intermediaries mayoffer this service.

This Prospectus contains information you should know before investing, including information about risks.Please read it before you invest and keep it for future reference.

The Securities and Exchange Commission and the Commodity Futures Trading Commission have not approvedor disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to thecontrary is a criminal offense.

Not FDIC Insured • May Lose Value • No Bank Guarantee

Table of Contents

Fund Overview Key facts and details about the Funds listed in this prospectus,including investment objectives, principal investment strategies,principal risk factors, fee and expense information and historicalperformance informationKey Facts About BlackRock High Yield Bond Portfolio ................................ 3Key Facts About BlackRock Low Duration Bond Portfolio............................ 10

Details About the Funds How Each Fund Invests ........................................................................... 17Investment Risks.................................................................................... 20

Account Information Information about account services, sales charges and waivers,shareholder transactions, and distributions and other paymentsHow to Choose the Share Class that Best Suits Your Needs ...................... 30Details About the Share Classes ............................................................. 30Distribution and Shareholder Servicing Payments...................................... 31How to Buy, Sell, Exchange and Transfer Shares ....................................... 32Account Services and Privileges .............................................................. 37Funds’ Rights ......................................................................................... 37Participation in Fee-Based Programs ........................................................ 38Short-Term Trading Policy ........................................................................ 38

Management of the Funds Information about BlackRock and the Portfolio ManagersBlackRock.............................................................................................. 40Portfolio Manager Information ................................................................. 42Conflicts of Interest ................................................................................ 43Valuation of Fund Investments ................................................................. 44Dividends, Distributions and Taxes........................................................... 45

Financial Highlights Financial Performance of the Funds ......................................................... 47

General Information Shareholder Documents.......................................................................... 51Certain Fund Policies .............................................................................. 51Statement of Additional Information......................................................... 52

Glossary Glossary of Investment Terms ................................................................. 53

For More Information Funds and Service Providers ............................................. Inside Back CoverAdditional Information....................................................... Back Cover

Fund Overview

Key Facts About BlackRock High Yield Bond Portfolio

Investment Objective

The investment objective of the BlackRock High Yield Bond Portfolio (the “High Yield Fund” or the “Fund”) is to seek tomaximize total return, consistent with income generation and prudent investment management.


This table describes the fees and expenses that you may pay if you buy and hold Investor C1 Shares of the Fund.


Investor C1Shares

Maximum Sales Charge (Load) Imposed on Purchases (as percentage of offering price) None

Maximum Deferred Sales Charge (Load) (as percentage of offering price or redemption proceeds, whichever islower) None1

Annual Fund Operating Expenses(expenses that you pay each year as a percentage of the value of your investment)

Investor C1Shares

Management Fee2 0.41%

Distribution and/or Service (12b-1) Fees 0.80%

Other Expenses 0.30%

Acquired Fund Fees and Expenses3 0.02%

Total Annual Fund Operating Expenses3 1.53%

Fee Waivers and/or Expense Reimbursements2,4 —

Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements2,4 1.53%1 A CDSC of 1.00% is assessed on certain redemptions of Investor C1 Shares made within one year after purchase. The CDSC does not apply to

redemptions by certain employer-sponsored retirement plans or to redemptions of shares acquired through reinvestment of dividends and capitalgains by existing shareholders.

2 As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 40, BlackRock Advisors, LLC (“BlackRock”)has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable toinvestments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have acontractual management fee, through January 31, 2021. In addition, BlackRock has contractually agreed to waive its management fees by theamount of investment advisory fees the Fund pays to BlackRock indirectly through its investment in money market funds managed by BlackRockor its affiliates through January 31, 2021. The contractual agreements may be terminated upon 90 days’ notice by a majority of the non-interested trustees of BlackRock Funds V (the “Trust”) or by a vote of a majority of the outstanding voting securities of the Fund.

3 The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund’s most recentannual report, which do not include Acquired Fund Fees and Expenses.

4 As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 40, BlackRock has contractually agreed towaive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or ExpenseReimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.56%(for Investor C1 Shares) of average daily net assets through January 31, 2021. The contractual agreement may be terminated upon 90 days’notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.

Example:This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in othermutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and thenredeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5%return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higheror lower, based on these assumptions your costs would be:


Investor C1 Shares $156 $483 $834 $1,824

3

Portfolio Turnover:The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes whenshares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in theExample, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was102% of the average value of its portfolio.


The High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The High YieldFund normally invests at least 80% of its assets in high yield bonds. The high yield securities (commonly called “junkbonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the major rating agencies (BBor lower by S&P Global Ratings or Fitch Ratings, Inc. or Ba or lower by Moody’s Investor Services) or will be determinedby the High Yield Fund management team to be of similar quality. Split rated bonds will be considered to have thehigher credit rating. The Fund may invest up to 30% of its assets in non-dollar denominated bonds of issuers locatedoutside of the United States. The High Yield Fund’s investment in non-dollar denominated bonds may be on a currencyhedged or unhedged basis. The Fund may also invest in convertible and preferred securities. Convertible debtsecurities will be counted toward the Fund’s 80% policy to the extent they have characteristics similar to the securitiesincluded within that policy.

To add additional diversification, the management team can invest in a wide range of securities including corporatebonds, mezzanine investments, collateralized bond obligations, bank loans and mortgage-backed and asset-backedsecurities. The High Yield Fund can also invest, to the extent consistent with its investment objective, in non-U.S. andemerging market securities and currencies. The High Yield Fund may invest in securities of any rating, and may investup to 10% of its assets (measured at the time of investment) in distressed securities that are in default or the issuersof which are in bankruptcy.

The High Yield Fund may buy or sell options or futures on a security or an index of securities, or enter into creditdefault swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known asderivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. TheHigh Yield Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into aseries of purchase and sale contracts or by using other investment techniques (such as reverse repurchaseagreements or dollar rolls).

The High Yield Fund may engage in active and frequent trading of portfolio securities to achieve its principalinvestment strategies.


Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receiveon your investment, may fluctuate significantly from day to day and over time. You may lose part or all of yourinvestment in the Fund or your investment may not perform as well as other similar investments. The following is asummary description of principal risks of investing in the Fund. The order of the below risk factors does not indicatethe significance of any particular risk factor.

� Bank Loan Risk — The market for bank loans may not be highly liquid and the Fund may have difficulty sellingthem. These investments expose the Fund to the credit risk of both the financial institution and the underlyingborrower.

� Collateralized Bond Obligation Risk — The pool of high yield securities underlying collateralized bond obligations istypically separated into groupings called tranches representing different degrees of credit quality. The higher qualitytranches have greater degrees of protection and pay lower interest rates. The lower tranches, with greater risk, payhigher interest rates.

� Convertible Securities Risk — The market value of a convertible security performs like that of a regular debtsecurity; that is, if market interest rates rise, the value of a convertible security usually falls. In addition, convertiblesecurities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and theirmarket value may change based on changes in the issuer’s credit rating or the market’s perception of the issuer’screditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, aconvertible security is also subject to the same types of market and issuer risks that apply to the underlyingcommon stock.

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� Debt Securities Risk — Debt securities, such as bonds, involve interest rate risk, credit risk, extension risk, andprepayment risk, among other things.

Interest Rate Risk — The market value of bonds and other fixed-income securities changes in response to interestrate changes and other factors. Interest rate risk is the risk that prices of bonds and other fixed-income securitieswill increase as interest rates fall and decrease as interest rates rise.

The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates.For example, if interest rates increase by 1%, assuming a current portfolio duration of ten years, and all otherfactors being equal, the value of the Fund’s investments would be expected to decrease by 10%. The magnitude ofthese fluctuations in the market price of bonds and other fixed-income securities is generally greater for thosesecurities with longer maturities. Fluctuations in the market price of the Fund’s investments will not affect interestincome derived from instruments already owned by the Fund, but will be reflected in the Fund’s net asset value. TheFund may lose money if short-term or long-term interest rates rise sharply in a manner not anticipated by Fundmanagement.

To the extent the Fund invests in debt securities that may be prepaid at the option of the obligor (such as mortgage-backed securities), the sensitivity of such securities to changes in interest rates may increase (to the detriment ofthe Fund) when interest rates rise. Moreover, because rates on certain floating rate debt securities typically resetonly periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can beexpected to cause some fluctuations in the net asset value of the Fund to the extent that it invests in floating ratedebt securities.

These basic principles of bond prices also apply to U.S. Government securities. A security backed by the “full faithand credit” of the U.S. Government is guaranteed only as to its stated interest rate and face value at maturity, notits current market price. Just like other fixed-income securities, government-guaranteed securities will fluctuate invalue when interest rates change.

A general rise in interest rates has the potential to cause investors to move out of fixed-income securities on a largescale, which may increase redemptions from funds that hold large amounts of fixed-income securities. Heavyredemptions could cause the Fund to sell assets at inopportune times or at a loss or depressed value and couldhurt the Fund’s performance.

Credit Risk — Credit risk refers to the possibility that the issuer of a debt security (i.e., the borrower) will not beable to make payments of interest and principal when due. Changes in an issuer’s credit rating or the market’sperception of an issuer’s creditworthiness may also affect the value of the Fund’s investment in that issuer. Thedegree of credit risk depends on both the financial condition of the issuer and the terms of the obligation.


Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quickly thanoriginally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.

� Derivatives Risk — The Fund’s use of derivatives may increase its costs, reduce the Fund’s returns and/orincrease volatility. Derivatives involve significant risks, including:

Volatility Risk — Volatility is defined as the characteristic of a security, an index or a market to fluctuate significantlyin price within a short time period. A risk of the Fund’s use of derivatives is that the fluctuations in their values maynot correlate with the overall securities markets.

Counterparty Risk — Derivatives are also subject to counterparty risk, which is the risk that the other party in thetransaction will not fulfill its contractual obligation.



Hedging Risk — Hedges are sometimes subject to imperfect matching between the derivative and the underlyingsecurity, and there can be no assurance that the Fund’s hedging transactions will be effective. The use of hedgingmay result in certain adverse tax consequences.

Tax Risk — Certain aspects of the tax treatment of derivative instruments, including swap agreements andcommodity-linked derivative instruments, are currently unclear and may be affected by changes in legislation,regulations or other legally binding authority. Such treatment may be less favorable than that given to a direct

5

investment in an underlying asset and may adversely affect the timing, character and amount of income the Fundrealizes from its investments.

Regulatory Risk — Derivative contracts, including, without limitation, swaps, currency forwards and non-deliverableforwards, are subject to regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the“Dodd-Frank Act”) in the United States and under comparable regimes in Europe, Asia and other non-U.S.jurisdictions. Under the Dodd-Frank Act, certain derivatives are subject to margin requirements and swap dealersare required to collect margin from the Fund with respect to such derivatives. Specifically, regulations are now ineffect that require swap dealers to post and collect variation margin (comprised of specified liquid instruments andsubject to a required haircut) in connection with trading of over-the-counter (“OTC”) swaps with the Fund. Shares ofinvestment companies (other than certain money market funds) may not be posted as collateral under theseregulations. Requirements for posting of initial margin in connection with OTC swaps will be phased-in through atleast 2021. In addition, regulations adopted by global prudential regulators that are now in effect require certainbank-regulated counterparties and certain of their affiliates to include in certain financial contracts, including manyderivatives contracts, terms that delay or restrict the rights of counterparties, such as the Fund, to terminate suchcontracts, foreclose upon collateral, exercise other default rights or restrict transfers of credit support in the eventthat the counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. Theimplementation of these requirements with respect to derivatives, as well as regulations under the Dodd-Frank Actregarding clearing, mandatory trading and margining of other derivatives, may increase the costs and risks to theFund of trading in these instruments and, as a result, may affect returns to investors in the Fund.

� Distressed Securities Risk — Distressed securities are speculative and involve substantial risks in addition to therisks of investing in junk bonds. The Fund will generally not receive interest payments on the distressed securitiesand may incur costs to protect its investment. In addition, distressed securities involve the substantial risk thatprincipal will not be repaid. These securities may present a substantial risk of default or may be in default at thetime of investment. The Fund may incur additional expenses to the extent it is required to seek recovery upon adefault in the payment of principal of or interest on its portfolio holdings. In any reorganization or liquidationproceeding relating to a portfolio company, the Fund may lose its entire investment or may be required to acceptcash or securities with a value less than its original investment. Distressed securities and any securities received inan exchange for such securities may be subject to restrictions on resale.

� Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed tobuy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.

� Emerging Markets Risk — Emerging markets are riskier than more developed markets because they tend todevelop unevenly and may never fully develop. Investments in emerging markets may be considered speculative.Emerging markets are more likely to experience hyperinflation and currency devaluations, which adversely affectreturns to U.S. investors. In addition, many emerging securities markets have far lower trading volumes and lessliquidity than developed markets.

� Foreign Securities Risk — Foreign investments often involve special risks not present in U.S. investments that canincrease the chances that the Fund will lose money. These risks include:

� The Fund generally holds its foreign securities and cash in foreign banks and securities depositories, which maybe recently organized or new to the foreign custody business and may be subject to only limited or no regulatoryoversight.

� Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.

� The economies of certain foreign markets may not compare favorably with the economy of the United States withrespect to such issues as growth of gross national product, reinvestment of capital, resources and balance ofpayments position.

� The governments of certain countries may prohibit or impose substantial restrictions on foreign investments intheir capital markets or in certain industries.

� Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities tothe same extent as does the United States and may not have laws to protect investors that are comparable toU.S. securities laws.

� Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery ofsecurities not typically associated with settlement and clearance of U.S. investments.

� The European financial markets have recently experienced volatility and adverse trends due to concerns abouteconomic downturns in, or rising government debt levels of, several European countries. These events mayspread to other countries in Europe. These events may affect the value and liquidity of certain of the Fund’sinvestments.

6

� High Portfolio Turnover Risk — The Fund may engage in active and frequent trading of its portfolio securities. Highportfolio turnover (more than 100%) may result in increased transaction costs to the Fund, including brokeragecommissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment inother securities. The sale of Fund portfolio securities may result in the realization and/or distribution toshareholders of higher capital gains or losses as compared to a fund with less active trading policies. These effectsof higher than normal portfolio turnover may adversely affect Fund performance. In addition, investment inmortgage dollar rolls and participation in TBA transactions may significantly increase the Fund’s portfolio turnoverrate. A TBA transaction is a method of trading mortgage-backed securities where the buyer and seller agree upongeneral trade parameters such as agency, settlement date, par amount, and price at the time the contract isentered into but the mortgage-backed securities are delivered in the future, generally 30 days later.

� Illiquid Investments Risk — The Fund may invest up to an aggregate amount of 15% of its net assets in illiquidinvestments. An illiquid investment is any investment that the Fund reasonably expects cannot be sold or disposedof in current market conditions in seven calendar days or less without the sale or disposition significantly changingthe market value of the investment. The Fund’s illiquid investments may reduce the returns of the Fund because itmay be difficult to sell the illiquid investments at an advantageous time or price. An investment may be illiquid dueto, among other things, the reduced number and capacity of traditional market participants to make a market infixed-income securities or the lack of an active trading market. To the extent that the Fund’s principal investmentstrategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have thegreatest exposure to the risks associated with illiquid investments. Liquid investments may become illiquid afterpurchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be harder to value,especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests orfor other cash needs, the Fund may suffer a loss. This may be magnified in a rising interest rate environment orother circumstances where investor redemptions from fixed-income mutual funds may be higher than normal. Inaddition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on illiquidinvestments, may be subject to purchase and sale restrictions.

� Junk Bonds Risk — Although junk bonds generally pay higher rates of interest than investment grade bonds, junkbonds are high risk investments that are considered speculative and may cause income and principal losses for theFund.

� Leverage Risk — Some transactions may give rise to a form of economic leverage. These transactions may include,among others, derivatives, and may expose the Fund to greater risk and increase its costs. The use of leverage maycause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations orto meet any required asset segregation requirements. Increases and decreases in the value of the Fund’s portfoliowill be magnified when the Fund uses leverage.

� Market Risk and Selection Risk — Market risk is the risk that one or more markets in which the Fund invests willgo down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk isthe risk that the securities selected by Fund management will underperform the markets, the relevant indices or thesecurities selected by other funds with similar investment objectives and investment strategies. This means youmay lose money.

� Mezzanine Securities Risk — Mezzanine securities carry the risk that the issuer will not be able to meet itsobligations and that the equity securities purchased with the mezzanine investments may lose value.

� Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in“pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also aresubject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn.Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value ofcertain mortgage-backed securities.

� Preferred Securities Risk — Preferred securities may pay fixed or adjustable rates of return. Preferred securitiesare subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’spreferred securities generally pay dividends only after the company makes required payments to holders of itsbonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bondsand other debt to actual or perceived changes in the company’s financial condition or prospects. Preferredsecurities of smaller companies may be more vulnerable to adverse developments than preferred securities oflarger companies.

� Repurchase Agreements and Purchase and Sale Contracts Risk — If the other party to a repurchase agreement orpurchase and sale contract defaults on its obligation under the agreement, the Fund may suffer delays and incurcosts or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security ineither situation and the market value of the security declines, the Fund may lose money.

7

� Reverse Repurchase Agreements Risk — Reverse repurchase agreements involve the sale of securities held by theFund with an agreement to repurchase the securities at an agreed-upon price, date and interest payment. Reverserepurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or atall. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by theFund, including the value of the investments made with cash collateral, is less than the value of the securities.These events could also trigger adverse tax consequences to the Fund.

Performance Information

The information shows you how the Fund’s performance has varied year by year and provides some indication of therisks of investing in the Fund. The Fund acquired all of the assets, subject to the liabilities, of BlackRock High YieldBond Portfolio, a series of BlackRock Funds II (the “ Predecessor Fund”), in a reorganization on September 17, 2018(the “Reorganization”). The table compares the Fund’s performance to that of the Bloomberg Barclays U.S. CorporateHigh Yield 2% Issuer Capped Index. The Fund adopted the performance of the Predecessor Fund as a result of theReorganization. The performance information below is based on the performance of the Predecessor Fund for periodsprior to the date of the Reorganization. The Predecessor Fund had the same investment objectives, strategies andpolicies, portfolio management team and contractual arrangements, including the same contractual fees andexpenses, as the Fund as of the date of the Reorganization. To the extent that dividends and distributions have beenpaid by the Fund, the performance information for the Fund in the chart and table assumes reinvestment of thedividends and distributions. As with all such investments, past performance (before and after taxes) is not anindication of future results. The table includes all applicable fees. If the Fund’s investment manager and its affiliateshad not waived or reimbursed certain Fund expenses during these periods, the Fund’s returns would have been lower.Updated information on the Fund’s performance, including its current net asset value, can be obtained by visitinghttp://www.blackrock.com or can be obtained by phone at (800) 882-0052.

Investor C1 SharesANNUAL TOTAL RETURNS

BlackRock High Yield Bond PortfolioAs of 12/31

17.33%

2.32%

16.05%

8.45%

2.33%

-4.87%

12.90%

7.26%

-3.65%

14.43%

-10%

-5%

0%

5%

10%

15%

20%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

During the ten-year period shown in the bar chart, the highest return for a quarter was 7.04% (quarter endedMarch 31, 2019) and the lowest return for a quarter was -6.42% (quarter ended September 30, 2011).

As of 12/31/19Average Annual Total Returns 1 Year 5 Years 10 Years

BlackRock High Yield Bond Portfolio — Investor C1 SharesReturn Before Taxes 14.43% 4.90% 6.98%Return After Taxes on Distributions 12.19% 2.71% 4.61%Return After Taxes on Distributions and Sale of Fund Shares 8.51% 2.75% 4.43%

Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index(Reflects no deduction for fees, expenses or taxes) 14.32% 6.14% 7.55%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do notreflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and maydiffer from those shown, and the after-tax returns shown are not relevant to investors who hold their shares throughtax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

8

Investment Manager

The Fund’s investment manager is BlackRock Advisors, LLC (previously defined as “BlackRock”). The Fund’s sub-adviser is BlackRock International Limited. Where applicable, the use of the term BlackRock also refers to the Fund’ssub-adviser.

Portfolio Managers

NamePortfolio Managerof the Fund Since* Title

James Keenan, CFA 2007 Managing Director of BlackRock, Inc.

Mitchell Garfin, CFA 2009 Managing Director of BlackRock, Inc.

David Delbos 2014 Managing Director of BlackRock, Inc.

Derek Schoenhofen 2009 Managing Director of BlackRock, Inc.


Purchase and Sale of Fund Shares

Investor C1 Shares are closed to new investors and to subsequent purchases, except for those investors in certainemployer-sponsored retirement plans and for dividend and capital gain reinvestment by existing shareholders.

You may redeem shares of the Fund each day the New York Stock Exchange is open. To sell your shares you shouldcontact your selected securities dealer, broker, investment adviser, service provider or industry professional (includingBlackRock and its affiliates) (each a “Financial Intermediary”), or, if you hold your shares through the Fund, you shouldcontact the Fund by phone at (800) 441-7762, by mail (c/o BlackRock Funds, P.O. Box 9819, Providence, RhodeIsland 02940-8019), or by the Internet at www.blackrock.com. The Fund’s initial and subsequent investmentminimums generally are as follows, although the Fund may reduce or waive the minimums in some cases:

Investor C1 Shares

Minimum InitialInvestment

Available only for purchase by certain employer-sponsored retirement plans and fordividend and capital gain reinvestment by existing shareholders.

Minimum AdditionalInvestment

N/A

Tax Information

The Fund’s dividends and distributions may be subject to U.S. federal income taxes and may be taxed as ordinaryincome or capital gains, unless you are a tax-exempt investor or are investing through a qualified tax-exempt plandescribed in section 401(a) of the Internal Revenue Code, in which case you may be subject to U.S. federal income taxwhen distributions are received from such tax-deferred arrangements.

Payments to Broker/Dealers and Other Financial Intermediaries

If you purchase shares of the Fund through a Financial Intermediary, the Fund and BlackRock Investments, LLC, theFund’s distributor, or its affiliates may pay the Financial Intermediary for the sale of Fund shares and related services.These payments may create a conflict of interest by influencing the Financial Intermediary and your individual financialprofessional to recommend the Fund over another investment.

Ask your individual financial professional or visit your Financial Intermediary’s website for more information.

9

Fund Overview

Key Facts About BlackRock Low Duration Bond Portfolio

Investment Objective

The investment objective of the BlackRock Low Duration Bond Portfolio (the “Low Duration Fund” or the “Fund”) is toseek to maximize total return, consistent with income generation and prudent investment management.


This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.


Investor A1Shares

Investor C2Shares

Investor C3Shares

Maximum Sales Charge (Load) Imposed on Purchases (as percentage of offering price) None1 None None

Maximum Deferred Sales Charge (Load) (as percentage of offering price or redemptionproceeds, whichever is lower) None2 None3 None3

Annual Fund Operating Expenses(expenses that you pay each year as apercentage of the value of your investment)

Investor A1Shares

Investor C2Shares

Investor C3Shares

Management Fee4 0.29% 0.29% 0.29%

Distribution and/or Service (12b-1) Fees 0.10% 0.40% 0.90%

Other Expenses 0.20% 0.52% 0.42%

Acquired Fund Fees and Expenses5 0.01% 0.01% 0.01%

Total Annual Fund Operating Expenses5 0.60% 1.22% 1.62%

Fee Waivers and/or Expense Reimbursements4,6 (0.09)% (0.41)% (0.31)%

Total Annual Fund Operating Expenses After Fee Waivers and/or ExpenseReimbursements4,6 0.51% 0.81% 1.31%

1 Investor A1 Shares are subject to a maximum sales charge on purchases of 1.00%. The sales charge does not apply to dividend and capital gainreinvestments by existing shareholders and new purchases for certain employer-sponsored retirement plans, which are currently the onlyinvestors who may invest in Investor A1 Shares.

2 A contingent deferred sales charge (“CDSC”) of 0.50% is assessed on certain redemptions of Investor A1 Shares made within 18 months afterpurchase where no initial sales charge was paid at the time of purchase. The CDSC does not apply to redemptions by certain employer-sponsored retirement plans or to redemptions of shares acquired through reinvestment of dividends and capital gains by existing shareholders.

3 A CDSC of 1.00% is assessed on certain redemptions of Investor C2 Shares or Investor C3 Shares made within one year after purchase. TheCDSC does not apply to redemptions by certain employer-sponsored retirement plans or to redemptions of shares acquired through reinvestmentof dividends and capital gains by existing shareholders.

4 As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 40, BlackRock Advisors, LLC (“BlackRock”)has contractually agreed to waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable toinvestments in other equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have acontractual management fee, through January 31, 2021. In addition, BlackRock has contractually agreed to waive its management fees by theamount of investment advisory fees the Fund pays to BlackRock indirectly through its investment in money market funds managed by BlackRockor its affiliates through January 31, 2021. The contractual agreements may be terminated upon 90 days’ notice by a majority of the non-interested trustees of BlackRock Funds V (the “Trust”) or by a vote of a majority of the outstanding voting securities of the Fund.

5 The Total Annual Fund Operating Expenses do not correlate to the ratios of expenses to average net assets given in the Fund’s most recentannual report, which do not include Acquired Fund Fees and Expenses.

6 As described in the “Management of the Funds” section of the Fund’s prospectus beginning on page 40, BlackRock has contractually agreed towaive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or ExpenseReimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 0.50%(for Investor A1 Shares), 0.80% (for Investor C2 Shares) and 1.30% (for Investor C3 Shares) of average daily net assets throughJanuary 31, 2021. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested trustees of the Trustor by a vote of a majority of the outstanding voting securities of the Fund.

Example:This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in othermutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and thenredeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5%

10

return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higheror lower, based on these assumptions your costs would be:


Investor A1 Shares $ 52 $183 $326 $ 741

Investor C2 Shares $ 83 $347 $631 $1,441

Investor C3 Shares $133 $481 $852 $1,896

Portfolio Turnover:The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes whenshares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in theExample, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was182% of the average value of its portfolio.


The Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio duration that isbetween 0 and 3 years.

The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fund mayinvest up to 20% of its assets in non-investment grade bonds (commonly called “high yield” or “junk bonds”). The LowDuration Fund may also invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage ofthe Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Low Duration Fund’s assets maybe exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not counttoward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars.

The management team evaluates sectors of the bond market and individual securities within these sectors. Themanagement team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercialand residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities andcorporate bonds.

The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter into creditdefault swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known asderivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. TheFund may seek to obtain market exposure to the securities in which it primarily invests by entering into a series ofpurchase and sale contracts or by using other investment techniques (such as mortgage dollar rolls).



Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receiveon your investment, may fluctuate significantly from day to day and over time. You may lose part or all of yourinvestment in the Fund or your investment may not perform as well as other similar investments. The following is asummary description of principal risks of investing in the Fund. The order of the below risk factors does not indicatethe significance of any particular risk factor.

� Borrowing Risk — Borrowing may exaggerate changes in the net asset value of Fund shares and in the return onthe Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs of borrowing mayreduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not be advantageous todo so to satisfy its obligations.



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A general rise in interest rates has the potential to cause investors to move out of fixed-income securities on a largescale, which may increase redemptions from funds that hold large amounts of fixed-income securities. Heavyredemptions could cause the Fund to sell assets at inopportune times or at a loss or depressed value and couldhurt the Fund’s performance.



Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quickly thanoriginally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.


Volatility Risk — Volatility is defined as the characteristic of a security, an index or a market to fluctuate significantlyin price within a short time period. A risk of the Fund’s use of derivatives is that the fluctuations in their values maynot correlate with the overall securities markets.




Hedging Risk — Hedges are sometimes subject to imperfect matching between the derivative and the underlyingsecurity, and there can be no assurance that the Fund’s hedging transactions will be effective. The use of hedgingmay result in certain adverse tax consequences.

Tax Risk — Certain aspects of the tax treatment of derivative instruments, including swap agreements andcommodity-linked derivative instruments, are currently unclear and may be affected by changes in legislation,regulations or other legally binding authority. Such treatment may be less favorable than that given to a directinvestment in an underlying asset and may adversely affect the timing, character and amount of income the Fundrealizes from its investments.

Regulatory Risk — Derivative contracts, including, without limitation, swaps, currency forwards and non-deliverableforwards, are subject to regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the“Dodd-Frank Act”) in the United States and under comparable regimes in Europe, Asia and other non-U.S.jurisdictions. Under the Dodd-Frank Act, certain derivatives are subject to margin requirements and swap dealersare required to collect margin from the Fund with respect to such derivatives. Specifically, regulations are now in

12

effect that require swap dealers to post and collect variation margin (comprised of specified liquid instruments andsubject to a required haircut) in connection with trading of over-the-counter (“OTC”) swaps with the Fund. Shares ofinvestment companies (other than certain money market funds) may not be posted as collateral under theseregulations. Requirements for posting of initial margin in connection with OTC swaps will be phased-in through atleast 2021. In addition, regulations adopted by global prudential regulators that are now in effect require certainbank-regulated counterparties and certain of their affiliates to include in certain financial contracts, including manyderivatives contracts, terms that delay or restrict the rights of counterparties, such as the Fund, to terminate suchcontracts, foreclose upon collateral, exercise other default rights or restrict transfers of credit support in the eventthat the counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. Theimplementation of these requirements with respect to derivatives, as well as regulations under the Dodd-Frank Actregarding clearing, mandatory trading and margining of other derivatives, may increase the costs and risks to theFund of trading in these instruments and, as a result, may affect returns to investors in the Fund.

� Dollar Rolls Risk — Dollar rolls involve the risk that the market value of the securities that the Fund is committed tobuy may decline below the price of the securities the Fund has sold. These transactions may involve leverage.

� Emerging Markets Risk — Emerging markets are riskier than more developed markets because they tend todevelop unevenly and may never fully develop. Investments in emerging markets may be considered speculative.Emerging markets are more likely to experience hyperinflation and currency devaluations, which adversely affectreturns to U.S. investors. In addition, many emerging securities markets have far lower trading volumes and lessliquidity than developed markets.

� Foreign Securities Risk — Foreign investments often involve special risks not present in U.S. investments that canincrease the chances that the Fund will lose money. These risks include:

� The Fund generally holds its foreign securities and cash in foreign banks and securities depositories, which maybe recently organized or new to the foreign custody business and may be subject to only limited or no regulatoryoversight.

� Changes in foreign currency exchange rates can affect the value of the Fund’s portfolio.

� The economies of certain foreign markets may not compare favorably with the economy of the United States withrespect to such issues as growth of gross national product, reinvestment of capital, resources and balance ofpayments position.

� The governments of certain countries may prohibit or impose substantial restrictions on foreign investments intheir capital markets or in certain industries.

� Many foreign governments do not supervise and regulate stock exchanges, brokers and the sale of securities tothe same extent as does the United States and may not have laws to protect investors that are comparable toU.S. securities laws.

� Settlement and clearance procedures in certain foreign markets may result in delays in payment for or delivery ofsecurities not typically associated with settlement and clearance of U.S. investments.


� Illiquid Investments Risk — The Fund may invest up to an aggregate amount of 15% of its net assets in illiquidinvestments. An illiquid investment is any investment that the Fund reasonably expects cannot be sold or disposedof in current market conditions in seven calendar days or less without the sale or disposition significantly changingthe market value of the investment. The Fund’s illiquid investments may reduce the returns of the Fund because itmay be difficult to sell the illiquid investments at an advantageous time or price. An investment may be illiquid dueto, among other things, the reduced number and capacity of traditional market participants to make a market infixed-income securities or the lack of an active trading market. To the extent that the Fund’s principal investmentstrategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have thegreatest exposure to the risks associated with illiquid investments. Liquid investments may become illiquid afterpurchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be harder to value,especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests or

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for other cash needs, the Fund may suffer a loss. This may be magnified in a rising interest rate environment orother circumstances where investor redemptions from fixed-income mutual funds may be higher than normal. Inaddition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on illiquidinvestments, may be subject to purchase and sale restrictions.

� Junk Bonds Risk — Although junk bonds generally pay higher rates of interest than investment grade bonds, junkbonds are high risk investments that are considered speculative and may cause income and principal losses for theFund.

� Leverage Risk — Some transactions may give rise to a form of economic leverage. These transactions may include,among others, derivatives, and may expose the Fund to greater risk and increase its costs. The use of leverage maycause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations orto meet any required asset segregation requirements. Increases and decreases in the value of the Fund’s portfoliowill be magnified when the Fund uses leverage.


� Mortgage- and Asset-Backed Securities Risks — Mortgage- and asset-backed securities represent interests in“pools” of mortgages or other assets, including consumer loans or receivables held in trust. Mortgage- and asset-backed securities are subject to credit, interest rate, prepayment and extension risks. These securities also aresubject to risk of default on the underlying mortgage or asset, particularly during periods of economic downturn.Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value ofcertain mortgage-backed securities.


� U.S. Government Issuer Risk — Treasury obligations may differ in their interest rates, maturities, times of issuanceand other characteristics. Obligations of U.S. Government agencies and authorities are supported by varyingdegrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance canbe given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligatedby law to do so.

Performance Information

The information shows you how the Fund’s performance has varied year by year and provides some indication of therisks of investing in the Fund. The Fund acquired all of the assets, subject to the liabilities, of BlackRock Low DurationBond Portfolio, a series of BlackRock Funds II (the “Predecessor Fund”), in a reorganization on September 17, 2018(the “Reorganization”). The table compares the Fund’s performance to that of the ICE BofAML 1-3 Year US Corporate &Government Index. The Fund adopted the performance of the Predecessor Fund as a result of the Reorganization. Theperformance information below is based on the performance of the Predecessor Fund for periods prior to the date ofthe Reorganization. The Predecessor Fund had the same investment objectives, strategies and policies, portfoliomanagement team and contractual arrangements, including the same contractual fees and expenses, as the Fund asof the date of the Reorganization. The returns for Investor C3 Shares prior to July 18, 2011, the commencement ofoperations of the Investor C3 Shares of the Predecessor Fund, are based upon the performance of the PredecessorFund’s Institutional Shares, as adjusted to reflect the distribution and service (12b-1) fees applicable to thePredecessor Fund’s Investor C3 Shares. To the extent that dividends and distributions have been paid by the Fund, theperformance information for the Fund in the chart and table assumes reinvestment of the dividends and distributions.As with all such investments, past performance (before and after taxes) is not an indication of future results. The tableincludes all applicable fees. If the Fund’s investment manager and its affiliates had not waived or reimbursed certainFund expenses during these periods, the Fund’s returns would have been lower. Updated information on the Fund’sperformance, including its current net asset value, can be obtained by visiting http://www.blackrock.com or can beobtained by phone at 800-882-0052.

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Investor A1 SharesANNUAL TOTAL RETURNS

BlackRock Low Duration Bond PortfolioAs of 12/31

5.34%

2.03%

5.01%

1.13% 1.35%

0.67%

1.84% 1.87%

0.89%

4.74%

0%

1%

2%

3%

4%

5%

6%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

During the ten-year period shown in the bar chart, the highest return for a quarter was 2.26% (quarter endedMarch 31, 2010) and the lowest return for a quarter was -1.13% (quarter ended June 30, 2013).

As of 12/31/19Average Annual Total Returns 1 Year 5 Years 10 Years

BlackRock Low Duration Bond Portfolio — Investor A1 SharesReturn Before Taxes 4.74% 1.99% 2.47%Return After Taxes on Distributions 3.68% 1.13% 1.58%Return After Taxes on Distributions and Sale of Fund Shares 2.79% 1.14% 1.53%

BlackRock Low Duration Bond Portfolio — Investor C2 SharesReturn Before Taxes 4.38% 1.66% 2.16%

BlackRock Low Duration Bond Portfolio — Investor C3 SharesReturn Before Taxes 3.80% 1.13% 1.56%

ICE BofAML 1-3 Year US Corporate & Government Index(Reflects no deduction for fees, expenses or taxes) 4.07% 1.69% 1.58%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do notreflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and maydiffer from those shown, and the after-tax returns shown are not relevant to investors who hold their shares throughtax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown forInvestor A1 Shares only, and the after-tax returns for Investor C2 and Investor C3 Shares will vary.

Investment Manager

The Fund’s investment manager is BlackRock Advisors, LLC (previously defined as “BlackRock”). The Fund’s sub-adviser is BlackRock International Limited. Where applicable, the use of the term BlackRock also refers to the Fund’ssub-adviser.

Portfolio Managers

NamePortfolio Managerof the Fund Since* Title

Thomas Musmanno, CFA 2008 Managing Director of BlackRock, Inc.

Scott MacLellan, CFA 2012 Director of BlackRock, Inc.


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Purchase and Sale of Fund Shares

Investor A1, Investor C2 and Investor C3 Shares are closed to new investors and to subsequent purchases, except forthose investors in certain employer-sponsored retirement plans and for dividend and capital gain reinvestment byexisting shareholders.

You may redeem shares of the Fund each day the New York Stock Exchange is open. To sell your shares you shouldcontact your selected securities dealer, broker, investment adviser, service provider or industry professional (includingBlackRock and its affiliates) (each a “Financial Intermediary”), or, if you hold your shares through the Fund, you shouldcontact the Fund by phone at (800) 441-7762, by mail (c/o BlackRock Funds, P.O. Box 9819, Providence, RhodeIsland 02940-8019), or by the Internet at www.blackrock.com. The Fund’s initial and subsequent investmentminimums generally are as follows, although the Fund may reduce or waive the minimums in some cases:

Investor A1, Investor C2 and Investor C3 Shares

Minimum InitialInvestment

Available only for purchase by certain employer-sponsored retirement plans and fordividend and capital gain reinvestment by existing shareholders.

Minimum AdditionalInvestment

N/A

Tax Information

The Fund’s dividends and distributions may be subject to U.S. federal income taxes and may be taxed as ordinaryincome or capital gains, unless you are a tax-exempt investor or are investing through a qualified tax-exempt plandescribed in section 401(a) of the Internal Revenue Code, in which case you may be subject to U.S. federal income taxwhen distributions are received from such tax-deferred arrangements.

Payments to Broker/Dealers and Other Financial Intermediaries

If you purchase shares of the Fund through a Financial Intermediary, the Fund and BlackRock Investments, LLC, theFund’s distributor, or its affiliates may pay the Financial Intermediary for the sale of Fund shares and related services.These payments may create a conflict of interest by influencing the Financial Intermediary and your individual financialprofessional to recommend the Fund over another investment.

Ask your individual financial professional or visit your Financial Intermediary’s website for more information.

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Details About the FundsIncluded in this prospectus are sections that tell you about buying and selling shares, management information,shareholder features of the BlackRock High Yield Bond Portfolio (the “High Yield Fund”) and the BlackRock LowDuration Bond Portfolio (the “Low Duration Fund”) (each, a “Fund” and together, the “Funds”) and your rights as ashareholder.

How Each Fund Invests

Investment Process of the Funds:For the High Yield Fund, the management team evaluates sectors of the high yield market and individual bonds withinthese sectors. Typically, the management team will invest in distressed securities when it believes they areundervalued.

Securities are purchased for a Fund when the management teams determine that they have the potential for above-average total return. Each Fund’s performance is measured against a specified benchmark.

If a security’s rating declines (for the High Yield Fund) or falls below B (for the Low Duration Fund), the managementteam will decide whether to continue to hold the security. A security will be sold if, in the opinion of the managementteam, the risk of continuing to hold the security is unacceptable when compared to its total return potential.

BlackRock uses an internal model for calculating duration, which may result in a different value for the duration of abenchmark compared to the duration calculated by the provider of the benchmark or another third party.

High Yield Fund

Investment ObjectiveThe investment objective of the High Yield Fund is to seek to maximize total return, consistent with income generationand prudent investment management.

This investment objective is a non-fundamental policy of the Fund and may not be changed without 30 days’ priornotice to shareholders.

Total return is a way of measuring fund performance. Total return is based on a calculation that takes into accountincome dividends, capital gain distributions and the increase or decrease in share price.

Principal Investment StrategiesThe High Yield Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The High YieldFund normally invests at least 80% of its assets in high yield bonds. The 80% policy is a non-fundamental policy of theFund and may not be changed without 60 days’ prior notice to shareholders. The high yield securities (commonly called“junk bonds”) acquired by the High Yield Fund will generally be in the lower rating categories of the major ratingagencies (BB or lower by S&P Global Ratings or Fitch Ratings, Inc. or Ba or lower by Moody’s Investor Services) or willbe determined by the High Yield Fund management team to be of similar quality. Split rated bonds will be consideredto have the higher credit rating. High yield securities are sometimes referred to as “junk bonds,” which are debtsecurities rated lower than investment grade (below the fourth highest rating of the major rating agencies). Thesesecurities generally pay more interest than higher rated securities. The higher yield is an incentive to investors whootherwise may be hesitant to purchase the debt of such a low-rated issuer. Split rated bonds are bonds that receivedifferent ratings from two or more rating agencies. The Fund may invest up to 30% of its assets in non-dollardenominated bonds of issuers located outside of the United States. The High Yield Fund’s investment in non-dollardenominated bonds may be on a currency hedged or unhedged basis. The Fund may also invest in convertible andpreferred securities. Convertible debt securities will be counted toward the Fund’s 80% policy to the extent they havecharacteristics similar to the securities included within that policy. Convertible securities generally are debt securitiesor preferred stock that may be converted into common stock. Convertible securities typically pay current income aseither interest (debt security convertibles) or dividends (preferred stock convertibles). A convertible security’s valueusually reflects both the stream of current income payments and the market value of the underlying stock. Preferred

17

stock is a class of stock that often pays dividends at a specified rate and has preference over common stock individend payments and liquidation of assets.

To add additional diversification, the management team can invest in a wide range of securities including corporatebonds, mezzanine investments, collateralized bond obligations, bank loans and mortgage-backed and asset-backedsecurities. The High Yield Fund can also invest, to the extent consistent with its investment objective, in non-U.S. andemerging market securities and currencies. The High Yield Fund may invest in securities of any rating, and may investup to 10% of its assets (measured at the time of investment) in distressed securities that are in default or the issuersof which are in bankruptcy. Mezzanine investments are subordinated debt securities that receive payments of interestand principal after other more senior security holders are paid. They are generally issued in private placements inconnection with an equity security. Collateralized bond obligations are securities backed by a diversified pool of highyield securities. Bank loans are fixed and floating rate loans arranged through private negotiations between a companyor a non-U.S. government and one or more financial institutions. The Fund considers such investments to be debtsecurities. Mortgage-backed securities are asset-backed securities based on a particular type of asset, a mortgage.There is a wide variety of mortgage-backed securities involving commercial or residential, fixed rate or adjustable ratemortgages and mortgages issued by banks or government agencies. Asset-backed securities are bonds that arebacked by a pool of assets, usually loans such as installment sale contracts or credit card receivables.

The High Yield Fund may buy or sell options or futures on a security or an index of securities, or enter into creditdefault swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known asderivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. TheHigh Yield Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into aseries of purchase and sale contracts or by using other investment techniques (such as reverse repurchaseagreements or dollar rolls).

The High Yield Fund may engage in active and frequent trading of portfolio securities to achieve its principalinvestment strategies.

ABOUT THE PORTFOLIO MANAGEMENT OF THE HIGH YIELD FUND

The High Yield Fund is managed by a team of financial professionals. James Keenan, CFA, is the portfolio managerjointly and primarily responsible for setting the Fund’s overall investment strategy and overseeing the Fund’sinvestment process and performance. Mitchell Garfin, CFA, David Delbos and Derek Schoenhofen are the portfoliomanagers jointly and primarily responsible for the day-to-day management of the Fund. Please see “Management ofthe Funds — Portfolio Manager Information” for additional information about the portfolio management team.

Low Duration Fund

Investment ObjectiveThe investment objective of the Low Duration Fund is to seek to maximize total return, consistent with incomegeneration and prudent investment management.

This investment objective is a non-fundamental policy of the Fund and may not be changed without 30 days’ priornotice to shareholders.

Total return is a way of measuring fund performance. Total return is based on a calculation that takes into accountincome dividends, capital gain distributions and the increase or decrease in share price.

Principal Investment StrategiesThe Low Duration Fund invests primarily in investment grade bonds and maintains an average portfolio duration that isbetween 0 and 3 years. Investment grade bonds are bonds rated in the four highest categories by at least one of themajor rating agencies or determined by the management team to be of similar quality. Generally, the higher the ratingof a bond, the higher the likelihood that interest and principal payments will be made on time.

The Low Duration Fund normally invests at least 80% of its assets in debt securities. The Low Duration Fund mayinvest up to 20% of its assets in non-investment grade bonds (commonly called “high yield” or “junk bonds”). The LowDuration Fund may also invest up to 25% of its assets in assets of foreign issuers, of which 10% (as a percentage ofthe Fund’s assets) may be invested in emerging markets issuers. Up to 10% of the Low Duration Fund’s assets maybe exposed to non-US currency risk. A bond of a foreign issuer, including an emerging market issuer, will not counttoward the 10% limit on non-US currency exposure if the bond is either (i) US dollar-denominated or (ii) non-US dollar-denominated, but hedged back to US dollars. The Low Duration Fund may also invest up to 5% of its assets in

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convertible securities with a minimum rating of B. Split rated bonds will be considered to have the higher credit rating.Split rated bonds are bonds that receive different ratings from two or more rating agencies.

The management team evaluates sectors of the bond market and individual securities within these sectors. Themanagement team selects bonds from several sectors including: U.S. Treasuries and agency securities, commercialand residential mortgage-backed securities, collateralized mortgage obligations (“CMOs”), asset-backed securities andcorporate bonds. Mortgage-backed securities are asset-backed securities based on a particular type of asset, amortgage. There is a wide variety of mortgage-backed securities involving commercial or residential, fixed rate oradjustable rate mortgages and mortgages issued by banks or government agencies. CMOs are bonds that are backedby cash flows from pools of mortgages. CMOs may have multiple classes with different payment rights andprotections. Asset-backed securities are bonds that are backed by a pool of assets, usually loans such as installmentsale contracts or credit card receivables.

The Low Duration Fund may buy or sell options or futures on a security or an index of securities, or enter into creditdefault swaps and interest rate or foreign currency transactions, including swaps (collectively, commonly known asderivatives). The Fund may use derivative instruments to hedge its investments or to seek to enhance returns. The LowDuration Fund may seek to obtain market exposure to the securities in which it primarily invests by entering into aseries of purchase and sale contracts or by using other investment techniques (such as mortgage dollar rolls).


ABOUT THE PORTFOLIO MANAGEMENT OF THE LOW DURATION FUND

The Low Duration Fund is managed by a team of financial professionals. Thomas Musmanno, CFA and ScottMacLellan, CFA are the portfolio managers and are jointly and primarily responsible for the day-to-day managementof the Fund. Please see “Management of the Funds — Portfolio Manager Information” for additional informationabout the portfolio management team.

Other Strategies of Each Fund:In addition to the principal strategies discussed above, the Funds may also invest or engage in the followinginvestments/strategies:

� Collateralized Debt Obligations (Low Duration Fund) — The Fund may invest up to 10% of its net assets incollateralized debt obligations (“CDOs”), including collateralized loan obligations (“CLOs”). CDOs are types of asset-backed securities. CLOs are ordinarily issued by a trust or other special purpose entity and are typicallycollateralized by a pool of loans, which may include, among others, domestic and non-U.S. senior secured loans,senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment gradeor equivalent unrated loans, held by such issuer.

� Common Stock (High Yield Fund) — The High Yield Fund may acquire and hold common stock either directly orindirectly. Indirect acquisitions include unit offerings with fixed-income securities or in connection with anamendment, waiver, or a conversion or exchange of fixed-income securities, or in connection with the bankruptcy orworkout of a distressed fixed-income security, or upon the exercise of a right or warrant obtained in connection withthe High Yield Fund’s investment in a fixed-income security. Direct investments in common stock will be limited to10% of the High Yield Fund’s assets.

� Investment Companies — Each Fund has the ability to invest in other investment companies, such as exchange-traded funds (“ETFs”), unit investment trusts, and open-end and closed-end funds. Each Fund may invest inaffiliated investment companies, including affiliated money market funds and affiliated ETFs.

� Temporary Defensive Strategies — For temporary defensive purposes, each Fund may restrict the markets in whichit invests and may invest without limitation in cash, cash equivalents, money market securities, such as U.S.Treasury and agency obligations, other U.S. Government securities, short-term debt obligations of corporateissuers, certificates of deposit, bankers acceptances, commercial paper (short-term, unsecured, negotiablepromissory notes of a domestic or foreign issuer) or other high quality fixed-income securities.

� When-Issued and Delayed Delivery Securities and Forward Commitments — Each Fund may invest in securitiesprior to their date of issue. The purchase or sale of securities on a when-issued basis or on a delayed delivery basisor through a forward commitment involves the purchase or sale of securities by the Fund at an established pricewith payment and delivery taking place in the future. The Fund enters into these transactions to obtain what isconsidered an advantageous price to the Fund at the time of entering into the transaction.

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Investment Risks

This section contains a discussion of the general risks of investing in the Funds. The “Investment Objectives andPolicies” section in the Statement of Additional Information (“SAI”) also includes more information about the Funds,their investments and the related risks. As with any fund, there can be no guarantee that the Fund will meet itsinvestment objective or that the Fund’s performance will be positive for any period of time. An investment in the Fundis not insured or guaranteed by the Federal Deposit Insurance Corporation or by any bank or governmental agency.Each risk noted below is applicable to each Fund unless the specific Fund or Funds are noted in a parenthetical. Theorder of the below risk factors does not indicate the significance of any particular risk factor.

Principal Risks of Investing in a Fund:� Bank Loan Risk (High Yield Fund) — The market for bank loans may not be highly liquid and the Fund may have

difficulty selling them. These investments expose the Fund to the credit risk of both the financial institution and theunderlying borrower.

� Borrowing Risk (Low Duration Fund) — Borrowing may exaggerate changes in the net asset value of Fund sharesand in the return on the Fund’s portfolio. Borrowing will cost the Fund interest expense and other fees. The costs ofborrowing may reduce the Fund’s return. Borrowing may cause the Fund to liquidate positions when it may not beadvantageous to do so to satisfy its obligations.

� Collateralized Bond Obligation Risk (High Yield Fund) — The pool of high yield securities underlying collateralizedbond obligations is typically separated into groupings called tranches representing different degrees of creditquality. The higher quality tranches have greater degrees of protection and pay lower interest rates. The lowertranches, with greater risk, pay higher interest rates.

� Convertible Securities Risk (High Yield Fund) — The market value of a convertible security performs like that of aregular debt security; that is, if market interest rates rise, the value of a convertible security usually falls. Inaddition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividendswhen due, and their market value may change based on changes in the issuer’s credit rating or the market’sperception of the issuer’s creditworthiness. Since it derives a portion of its value from the common stock into whichit may be converted, a convertible security is also subject to the same types of market and issuer risks that applyto the underlying common stock.






Following the financial crisis that began in 2007, the Federal Reserve has attempted to stabilize the economy andsupport the economic recovery by keeping the federal funds rate (the interest rate at which depository institutionslend reserve balances to other depository institutions overnight) at or near zero percent. In addition, as part of itsmonetary stimulus program known as quantitative easing, the Federal Reserve has purchased on the open market

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large quantities of securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities. As theFederal Reserve “tapers” or reduces the amount of securities it purchases pursuant to quantitative easing, and/orif the Federal Reserve raises the federal funds rate, there is a risk that interest rates will rise. A general rise ininterest rates has the potential to cause investors to move out of fixed-income securities on a large scale, whichmay increase redemptions from mutual funds that hold large amounts of fixed-income securities. Heavyredemptions could cause the Fund to sell assets at inopportune times or at a loss or depressed value and couldhurt the Fund’s performance.

During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns. Certaincountries have recently experienced negative interest rates on certain fixed-income instruments. Very low ornegative interest rates may magnify interest rate risk. Changing interest rates, including rates that fall below zero,may have unpredictable effects on markets, may result in heightened market volatility and may detract from Fundperformance to the extent the Fund is exposed to such interest rates.


Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly thananticipated, causing the value of these obligations to fall. Rising interest rates tend to extend the duration ofsecurities, making them more sensitive to changes in interest rates. The value of longer-term securities generallychanges more in response to changes in interest rates than shorter-term securities. As a result, in a period of risinginterest rates, securities may exhibit additional volatility and may lose value.

Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quickly thanoriginally anticipated, and the Fund may have to invest the proceeds in securities with lower yields. In periods offalling interest rates, the rate of prepayments tends to increase (as does price fluctuation) as borrowers aremotivated to pay off debt and refinance at new lower rates. During such periods, reinvestment of the prepaymentproceeds by the management team will generally be at lower rates of return than the return on the assets that wereprepaid. Prepayment reduces the yield to maturity and the average life of the security.


Volatility Risk — The Fund’s use of derivatives may reduce the Fund’s returns and/or increase volatility. Volatility isdefined as the characteristic of a security, an index or a market to fluctuate significantly in price within a short timeperiod. A risk of the Fund’s use of derivatives is that the fluctuations in their values may not correlate with theoverall securities markets.


Market and Illiquidity Risk — Some derivatives are more sensitive to interest rate changes and market pricefluctuations than other securities. The possible lack of a liquid secondary market for derivatives and the resultinginability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses and couldmake derivatives more difficult for the Fund to value accurately. The Fund could also suffer losses related to itsderivatives positions as a result of unanticipated market movements, which losses are potentially unlimited. Finally,BlackRock may not be able to predict correctly the direction of securities prices, interest rates and other economicfactors, which could cause the Fund’s derivatives positions to lose value.

Valuation Risk — Valuation may be more difficult in times of market turmoil since many investors and marketmakers may be reluctant to purchase complex instruments or quote prices for them. Derivatives may also exposethe Fund to greater risk and increase its costs. Certain transactions in derivatives involve substantial leverage riskand may expose the Fund to potential losses that exceed the amount originally invested by the Fund.

Hedging Risk — When a derivative is used as a hedge against a position that the Fund holds, any loss generated bythe derivative generally should be substantially offset by gains on the hedged investment, and vice versa. Whilehedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes subject toimperfect matching between the derivative and the underlying security, and there can be no assurance that theFund’s hedging transactions will be effective. The use of hedging may result in certain adverse tax consequencesnoted below.

Tax Risk — The federal income tax treatment of a derivative may not be as favorable as a direct investment in anunderlying asset and may adversely affect the timing, character and amount of income the Fund realizes from its

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investments. As a result, a larger portion of the Fund’s distributions may be treated as ordinary income rather thancapital gains. In addition, certain derivatives are subject to mark-to-market or straddle provisions of the InternalRevenue Code of 1986, as amended (the “Internal Revenue Code”). If such provisions are applicable, there couldbe an increase (or decrease) in the amount of taxable dividends paid by the Fund. In addition, the tax treatment ofcertain derivatives, such as swaps, is unsettled and may be subject to future legislation, regulation oradministrative pronouncements issued by the Internal Revenue Service (the “IRS”).

Regulatory Risk — Derivative contracts, including, without limitation, swaps, currency forwards and non-deliverableforwards, are subject to regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the“Dodd-Frank Act”) in the United States and under comparable regimes in Europe, Asia and other non-U.S.jurisdictions. Under the Dodd-Frank Act, certain derivatives are subject to margin requirements and swap dealersare required to collect margin from the Fund with respect to such derivatives. Specifically, regulations are now ineffect that require swap dealers to post and collect variation margin (comprised of specified liquid instruments andsubject to a required haircut) in connection with trading of over the counter (“OTC”) swaps with the Fund. Shares ofinvestment companies (other than certain money market funds) may not be posted as collateral under theseregulations. Requirements for posting of initial margin in connection with OTC swaps will be phased-in through atleast 2021. In addition, regulations adopted by global prudential regulators that are now in effect require certainbank-regulated counterparties and certain of their affiliates to include in certain financial contracts, including manyderivatives contracts, terms that delay or restrict the rights of counterparties, such as the Fund, to terminate suchcontracts, foreclose upon collateral, exercise other default rights or restrict transfers of credit support in the eventthat the counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. Theimplementation of these requirements with respect to derivatives, as well as regulations under the Dodd-Frank Actregarding clearing, mandatory trading and margining of other derivatives, may increase the costs and risks to theFund of trading in these instruments and, as a result, may affect returns to investors in the Fund.

Future regulatory developments may impact the Fund’s ability to invest or remain invested in certain derivatives.Legislation or regulation may also change the way in which the Fund itself is regulated. BlackRock cannot predictthe effects of any new governmental regulation that may be implemented on the ability of the Fund to use swaps orany other financial derivative product, and there can be no assurance that any new governmental regulation will notadversely affect the Fund’s ability to achieve its investment objective.

Risks Specific to Certain Derivatives Used by the Fund

Swaps — Swap agreements, including total return swaps that may be referred to as contracts for difference, aretwo-party contracts entered into for periods ranging from a few weeks to more than one year. In a standard“swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned orrealized on particular predetermined investments or instruments, which can be adjusted for an interest factor.Swap agreements involve the risk that the party with whom the Fund has entered into the swap will default on itsobligation to pay the Fund and the risk that the Fund will not be able to meet its obligations to pay the other partyto the agreement. Swap agreements may also involve the risk that there is an imperfect correlation between thereturn on the Fund’s obligation to its counterparty and the return on the referenced asset. In addition, swapagreements are subject to market and illiquidity risk, leverage risk and hedging risk.

Credit Default Swaps — Credit default swaps may have as reference obligations one or more securities that arenot currently held by the Fund. The protection “buyer” may be obligated to pay the protection “seller” an up-frontpayment or a periodic stream of payments over the term of the contract, provided generally that no credit eventon a reference obligation has occurred. Credit default swaps involve special risks in addition to those mentionedabove because they are difficult to value, are highly susceptible to illiquid investments risk and credit risk, andgenerally pay a return to the party that has paid the premium only in the event of an actual default by the issuerof the underlying obligation (as opposed to a credit downgrade or other indication of financial difficulty).

Forward Foreign Currency Exchange Contracts — Forward foreign currency exchange transactions are OTCcontracts to purchase or sell a specified amount of a specified currency or multinational currency unit at a priceand future date set at the time of the contract. Forward foreign currency exchange contracts do not eliminatefluctuations in the value of non-U.S. securities but rather allow the Fund to establish a fixed rate of exchange fora future point in time. This strategy can have the effect of reducing returns and minimizing opportunities for gain.

Futures — Futures are standardized, exchange-traded contracts that obligate a purchaser to take delivery, and aseller to make delivery, of a specific amount of an asset at a specified future date at a specified price. Theprimary risks associated with the use of futures contracts and options are (a) the imperfect correlation betweenthe change in market value of the instruments held by the Fund and the price of the futures contract or option;(b) the possible lack of a liquid secondary market for a futures contract and the resulting inability to close afutures contract when desired; (c) losses caused by unanticipated market movements, which are potentially

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unlimited; (d) the investment adviser’s inability to predict correctly the direction of securities prices, interestrates, currency exchange rates and other economic factors; and (e) the possibility that the counterparty willdefault in the performance of its obligations.

Options — An option is an agreement that, for a premium payment or fee, gives the option holder (the purchaser)the right but not the obligation to buy (a “call option”) or sell (a “put option”) the underlying asset (or settle forcash in an amount based on an underlying asset, rate, or index) at a specified price (the “exercise price”) duringa period of time or on a specified date. Investments in options are considered speculative. When the Fundpurchases an option, it may lose the total premium paid for it if the price of the underlying security or otherassets decreased, remained the same or failed to increase to a level at or beyond the exercise price (in the caseof a call option) or increased, remained the same or failed to decrease to a level at or below the exercise price(in the case of a put option). If a put or call option purchased by the Fund were permitted to expire without beingsold or exercised, its premium would represent a loss to the Fund. To the extent that the Fund writes or sells anoption, if the decline or increase in the underlying asset is significantly below or above the exercise price of thewritten option, the Fund could experience a substantial loss.

� Distressed Securities Risk (High Yield Fund) — Distressed securities are speculative and involve substantial risksin addition to the risks of investing in junk bonds. The Fund will generally not receive interest payments on thedistressed securities and may incur costs to protect its investment. In addition, distressed securities involve thesubstantial risk that principal will not be repaid. These securities may present a substantial risk of default or may bein default at the time of investment. The Fund may incur additional expenses to the extent it is required to seekrecovery upon a default in the payment of principal of or interest on its portfolio holdings. In any reorganization orliquidation proceeding relating to a portfolio company, the Fund may lose its entire investment or may be required toaccept cash or securities with a value less than its original investment. Distressed securities and any securitiesreceived in an exchange for such securities may be subject to restrictions on resale.

� Dollar Rolls Risk — A dollar roll transaction involves a sale by the Fund of a mortgage-backed, U.S. Treasury orother security (as permitted by the Fund’s investment strategies) concurrently with an agreement by the Fund torepurchase a similar security at a later date at an agreed-upon price. The market value of the securities the Fund isrequired to purchase may decline below the agreed upon repurchase price of those securities. If the broker/dealerto whom the Fund sells securities becomes insolvent, the Fund’s right to purchase or repurchase securities may berestricted. Successful use of dollar rolls may depend upon the adviser’s ability to correctly predict interest rates andprepayments, depending on the underlying security. There is no assurance that dollar rolls can be successfullyemployed.

� Emerging Markets Risk — The risks of foreign investments are usually much greater for emerging markets.Investments in emerging markets may be considered speculative. Emerging markets may include those in countriesconsidered emerging or developing by the World Bank, the International Finance Corporation or the United Nations.Emerging markets are riskier than more developed markets because they tend to develop unevenly and may neverfully develop. They are more likely to experience hyperinflation and currency devaluations, which adversely affectreturns to U.S. investors. In addition, many emerging markets have far lower trading volumes and less liquidity thandeveloped markets. Since these markets are often small, they may be more likely to suffer sharp and frequent pricechanges or long-term price depression because of adverse publicity, investor perceptions or the actions of a fewlarge investors. In addition, traditional measures of investment value used in the United States, such as price toearnings ratios, may not apply to certain small markets. Also, there may be less publicly available information aboutissuers in emerging markets than would be available about issuers in more developed capital markets, and suchissuers may not be subject to accounting, auditing and financial reporting standards and requirements comparableto those to which U.S. companies are subject.

Many emerging markets have histories of political instability and abrupt changes in policies. As a result, theirgovernments are more likely to take actions that are hostile or detrimental to private enterprise or foreigninvestment than those of more developed countries, including expropriation of assets, confiscatory taxation, highrates of inflation or unfavorable diplomatic developments. In the past, governments of such nations haveexpropriated substantial amounts of private property, and most claims of the property owners have never been fullysettled. There is no assurance that such expropriations will not reoccur. In such an event, it is possible that theFund could lose the entire value of its investments in the affected market. Some countries have pervasivecorruption and crime that may hinder investments. Certain emerging markets may also face other significantinternal or external risks, including the risk of war, and ethnic, religious and racial conflicts. In addition,governments in many emerging market countries participate to a significant degree in their economies andsecurities markets, which may impair investment and economic growth. National policies that may limit the Fund’sinvestment opportunities include restrictions on investment in issuers or industries deemed sensitive to nationalinterests.

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Emerging markets may also have differing legal systems and the existence or possible imposition of exchangecontrols, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to suchinvestments. Sometimes, they may lack or be in the relatively early development of legal structures governingprivate and foreign investments and private property. Many emerging markets do not have income tax treaties withthe United States, and as a result, investments by the Fund may be subject to higher withholding taxes in suchcountries. In addition, some countries with emerging markets may impose differential capital gains taxes on foreigninvestors.

Practices in relation to settlement of securities transactions in emerging markets involve higher risks than those indeveloped markets, in part because the Fund will need to use brokers and counterparties that are less wellcapitalized, and custody and registration of assets in some countries may be unreliable. The possibility of fraud,negligence, undue influence being exerted by the issuer or refusal to recognize that ownership exists in someemerging markets, and, along with other factors, could result in ownership registration being completely lost. TheFund would absorb any loss resulting from such registration problems and may have no successful claim forcompensation. In addition, communications between the United States and emerging market countries may beunreliable, increasing the risk of delayed settlements or losses of security certificates.

� Foreign Securities Risk — Securities traded in foreign markets have often (though not always) performed differentlyfrom securities traded in the United States. However, such investments often involve special risks not present inU.S. investments that can increase the chances that the Fund will lose money. In particular, the Fund is subject tothe risk that because there may be fewer investors on foreign exchanges and a smaller number of securities tradedeach day, it may be more difficult for the Fund to buy and sell securities on those exchanges. In addition, prices offoreign securities may go up and down more than prices of securities traded in the United States.

Certain Risks of Holding Fund Assets Outside the United States — The Fund generally holds its foreign securitiesand cash in foreign banks and securities depositories. Some foreign banks and securities depositories may berecently organized or new to the foreign custody business. In addition, there may be limited or no regulatoryoversight of their operations. Also, the laws of certain countries limit the Fund’s ability to recover its assets if aforeign bank, depository or issuer of a security, or any of their agents, goes bankrupt. In addition, it is often moreexpensive for the Fund to buy, sell and hold securities in certain foreign markets than in the United States. Theincreased expense of investing in foreign markets reduces the amount the Fund can earn on its investments andtypically results in a higher operating expense ratio for the Fund than for investment companies invested only in theUnited States.

Currency Risk — Securities and other instruments in which the Fund invests may be denominated or quoted incurrencies other than the U.S. dollar. For this reason, changes in foreign currency exchange rates can affect thevalue of the Fund’s portfolio.

Generally, when the U.S. dollar rises in value against a foreign currency, a security denominated in that currencyloses value because the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollar decreases in valueagainst a foreign currency, a security denominated in that currency gains value because the currency is worth moreU.S. dollars. This risk, generally known as “currency risk,” means that a strong U.S. dollar will reduce returns forU.S. investors while a weak U.S. dollar will increase those returns.

Foreign Economy Risk — The economies of certain foreign markets may not compare favorably with the economy ofthe United States with respect to such issues as growth of gross national product, reinvestment of capital,resources and balance of payments position. Certain foreign economies may rely heavily on particular industries orforeign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against aparticular country or countries, changes in international trading patterns, trade barriers and other protectionist orretaliatory measures. Investments in foreign markets may also be adversely affected by governmental actions suchas the imposition of capital controls, nationalization of companies or industries, expropriation of assets or theimposition of punitive taxes. In addition, the governments of certain countries may prohibit or impose substantialrestrictions on foreign investments in their capital markets or in certain industries. Any of these actions couldseverely affect securities prices or impair the Fund’s ability to purchase or sell foreign securities or transfer theFund’s assets or income back into the United States, or otherwise adversely affect the Fund’s operations.

Other potential foreign market risks include foreign exchange controls, difficulties in pricing securities, defaults onforeign government securities, difficulties in enforcing legal judgments in foreign courts and political and socialinstability. Diplomatic and political developments, including rapid and adverse political changes, social instability,regional conflicts, terrorism and war, could affect the economies, industries and securities and currency markets,and the value of the Fund’s investments, in non-U.S. countries. These factors are extremely difficult, if notimpossible, to predict and take into account with respect to the Fund’s investments.

Governmental Supervision and Regulation/Accounting Standards — Many foreign governments do not superviseand regulate stock exchanges, brokers and the sale of securities to the same extent as such regulations exist in

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the United States. They also may not have laws to protect investors that are comparable to U.S. securities laws. Forexample, some foreign countries may have no laws or rules against insider trading. Insider trading occurs when aperson buys or sells a company’s securities based on material non-public information about that company. Inaddition, some countries may have legal systems that may make it difficult for the Fund to vote proxies, exerciseshareholder rights, and pursue legal remedies with respect to its foreign investments. Accounting standards in othercountries are not necessarily the same as in the United States. If the accounting standards in another country donot require as much detail as U.S. accounting standards, it may be harder for Fund management to completely andaccurately determine a company’s financial condition.

Settlement Risk — Settlement and clearance procedures in certain foreign markets differ significantly from those inthe United States. Foreign settlement and clearance procedures and trade regulations also may involve certain risks(such as delays in payment for or delivery of securities) not typically associated with the settlement of U.S.investments.

At times, settlements in certain foreign countries have not kept pace with the number of securities transactions.These problems may make it difficult for the Fund to carry out transactions. If the Fund cannot settle or is delayedin settling a purchase of securities, it may miss attractive investment opportunities and certain of its assets may beuninvested with no return earned thereon for some period. If the Fund cannot settle or is delayed in settling a saleof securities, it may lose money if the value of the security then declines or, if it has contracted to sell the securityto another party, the Fund could be liable for any losses incurred.

European Economic Risk (High Yield Fund) — The European financial markets have recently experienced volatilityand adverse trends due to concerns about economic downturns in, or rising government debt levels of, severalEuropean countries. These events may spread to other countries in Europe. These events may affect the value andliquidity of certain of the Fund’s investments.

Responses to the financial problems by European governments, central banks and others, including austeritymeasures and reforms, may not work, may result in social unrest and may limit future growth and economicrecovery or have other unintended consequences. Further defaults or restructurings by governments and others oftheir debt could have additional adverse effects on economies, financial markets and asset valuations around theworld. In addition, the United Kingdom has voted to withdraw from the European Union, and one or more othercountries may withdraw from the European Union and/or abandon the Euro, the common currency of the EuropeanUnion. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could besignificant and far reaching.


� Illiquid Investments Risk — The Fund may invest up to an aggregate amount of 15% of its net assets in illiquidinvestments. An illiquid investment is any investment that the Fund reasonably expects cannot be sold or disposedof in current market conditions in seven calendar days or less without the sale or disposition significantly changingthe market value of the investment. The Fund’s illiquid investments may reduce the returns of the Fund because itmay be difficult to sell the illiquid investments at an advantageous time or price. An investment may be illiquid dueto, among other things, the reduced number and capacity of traditional market participants to make a market infixed-income securities or the lack of an active trading market. To the extent that the Fund’s principal investmentstrategies involve derivatives or securities with substantial market and/or credit risk, the Fund will tend to have thegreatest exposure to the risks associated with illiquid investments. Liquid investments may become illiquid afterpurchase by the Fund, particularly during periods of market turmoil. Illiquid investments may be harder to value,especially in changing markets, and if the Fund is forced to sell these investments to meet redemption requests orfor other cash needs, the Fund may suffer a loss. This may be magnified in a rising interest rate environment orother circumstances where investor redemptions from fixed-income mutual funds may be higher than normal. Inaddition, when there is illiquidity in the market for certain securities, the Fund, due to limitations on illiquidinvestments, may be subject to purchase and sale restrictions.

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� Junk Bonds Risk — Although junk bonds generally pay higher rates of interest than investment grade bonds, junkbonds are high risk investments that are considered speculative and may cause income and principal losses for theFund. The major risks of junk bond investments include:

� Junk bonds may be issued by less creditworthy issuers. Issuers of junk bonds may have a larger amount ofoutstanding debt relative to their assets than issuers of investment grade bonds. In the event of an issuer’sbankruptcy, claims of other creditors may have priority over the claims of junk bond holders, leaving few or noassets available to repay junk bond holders.

� Prices of junk bonds are subject to extreme price fluctuations. Adverse changes in an issuer’s industry andgeneral economic conditions may have a greater impact on the prices of junk bonds than on other higher ratedfixed-income securities.

� Issuers of junk bonds may be unable to meet their interest or principal payment obligations because of aneconomic downturn, specific issuer developments, or the unavailability of additional financing.

� Junk bonds frequently have redemption features that permit an issuer to repurchase the security from the Fundbefore it matures. If the issuer redeems junk bonds, the Fund may have to invest the proceeds in bonds withlower yields and may lose income.

� Junk bonds may be less liquid than higher rated fixed-income securities, even under normal economic conditions.There are fewer dealers in the junk bond market, and there may be significant differences in the prices quoted forjunk bonds by the dealers. Because they are less liquid than higher rated fixed-income securities, judgment mayplay a greater role in valuing junk bonds than is the case with securities trading in a more liquid market.

� The Fund may incur expenses to the extent necessary to seek recovery upon default or to negotiate new termswith a defaulting issuer.

The credit rating of a high yield security does not necessarily address its market value risk. Ratings and marketvalue may change from time to time, positively or negatively, to reflect new developments regarding the issuer.

� Leverage Risk — Some transactions may give rise to a form of economic leverage. These transactions may include,among others, derivatives, and may expose the Fund to greater risk and increase its costs. As an open-endinvestment company registered with the SEC, the Fund is subject to the federal securities laws, including theInvestment Company Act of 1940, as amended (the “Investment Company Act”), the rules thereunder, and variousSEC and SEC staff interpretive positions. In accordance with these laws, rules and positions, the Fund must “setaside” liquid assets (often referred to as “asset segregation”), or engage in other SEC- or staff-approved measures,to “cover” open positions with respect to certain kinds of instruments. The use of leverage may cause the Fund toliquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet anyrequired asset segregation requirements. Increases and decreases in the value of the Fund’s portfolio will bemagnified when the Fund uses leverage.


� Mezzanine Securities Risk (High Yield Fund) — Mezzanine securities generally are rated below investment gradeand frequently are unrated and present many of the same risks as senior loans, second lien loans and non-investment grade bonds. However, unlike senior loans and second lien loans, mezzanine securities are not a senioror secondary secured obligation of the related borrower. They typically are the most subordinated debt obligation inan issuer’s capital structure. Mezzanine securities also may often be unsecured. Mezzanine securities therefore aresubject to the additional risk that the cash flow of the related borrower and the property securing the loan may beinsufficient to repay the scheduled obligation after giving effect to any senior obligations of the related borrower.Mezzanine securities are also expected to be a highly illiquid investment.Mezzanine securities will be subject tocertain additional risks to the extent that such loans may not be protected by financial covenants or limitationsupon additional indebtedness. Investment in mezzanine securities is a highly specialized investment practice thatdepends more heavily on independent credit analysis than investments in other types of debt obligations.

� Mortgage- and Asset-Backed Securities Risks — Mortgage-backed securities (residential and commercial) andasset-backed securities represent interests in “pools” of mortgages or other assets, including consumer loans orreceivables held in trust. Although asset-backed and commercial mortgage-backed securities (“CMBS”) generallyexperience less prepayment than residential mortgage-backed securities, mortgage-backed and asset-backedsecurities, like traditional fixed-income securities, are subject to credit, interest rate, prepayment and extensionrisks.

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Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value ofcertain mortgage-backed securities. The Fund’s investments in asset-backed securities are subject to risks similarto those associated with mortgage-related securities, as well as additional risks associated with the nature of theassets and the servicing of those assets. These securities also are subject to the risk of default on the underlyingmortgages or assets, particularly during periods of economic downturn. Certain CMBS are issued in several classeswith different levels of yield and credit protection. The Fund’s investments in CMBS with several classes may be inthe lower classes that have greater risks than the higher classes, including greater interest rate, credit andprepayment risks.

Mortgage-backed securities may be either pass-through securities or collateralized mortgage obligations (“CMOs”).Pass-through securities represent a right to receive principal and interest payments collected on a pool ofmortgages, which are passed through to security holders. CMOs are created by dividing the principal and interestpayments collected on a pool of mortgages into several revenue streams (“tranches”) with different priority rights toportions of the underlying mortgage payments. Certain CMO tranches may represent a right to receive interest only(“IOs”), principal only (“POs”) or an amount that remains after floating-rate tranches are paid (an “inverse floater”).These securities are frequently referred to as “mortgage derivatives” and may be extremely sensitive to changes ininterest rates. Interest rates on inverse floaters, for example, vary inversely with a short-term floating rate (whichmay be reset periodically). Interest rates on inverse floaters will decrease when short-term rates increase, and willincrease when short-term rates decrease. These securities have the effect of providing a degree of investmentleverage. In response to changes in market interest rates or other market conditions, the value of an inverse floatermay increase or decrease at a multiple of the increase or decrease in the value of the underlying securities. If theFund invests in CMO tranches (including CMO tranches issued by government agencies) and interest rates move ina manner not anticipated by Fund management, it is possible that the Fund could lose all or substantially all of itsinvestment. Certain mortgage-backed securities in which the Fund may invest may also provide a degree ofinvestment leverage, which could cause the Fund to lose all or substantially all of its investment.

The mortgage market in the United States has experienced difficulties that may adversely affect the performanceand market value of certain of the Fund’s mortgage-related investments. Delinquencies and losses on mortgageloans (including subprime and second-lien mortgage loans) generally have increased and may continue to increase,and a decline in or flattening of real estate values (as has been experienced and may continue to be experienced inmany housing markets) may exacerbate such delinquencies and losses. Also, a number of mortgage loanoriginators have experienced serious financial difficulties or bankruptcy. Reduced investor demand for mortgageloans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in thesecondary market for mortgage-related securities, which can adversely affect the market value of mortgage-relatedsecurities. It is possible that such limited liquidity in such secondary markets could continue or worsen.

Asset-backed securities entail certain risks not presented by mortgage-backed securities, including the risk that incertain states it may be difficult to perfect the liens securing the collateral backing certain asset-backed securities.In addition, certain asset-backed securities are based on loans that are unsecured, which means that there is nocollateral to seize if the underlying borrower defaults.

� Preferred Securities Risk (High Yield Fund) — Preferred securities may pay fixed or adjustable rates of return.Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Inaddition, a company’s preferred securities generally pay dividends only after the company makes required paymentsto holders of its bonds and other debt. For this reason, the value of preferred securities will usually react morestrongly than bonds and other debt to actual or perceived changes in the company’s financial condition orprospects. Preferred securities of smaller companies may be more vulnerable to adverse developments thanpreferred securities of larger companies.


� Reverse Repurchase Agreements Risk (High Yield Fund) — Reverse repurchase agreements involve the sale ofsecurities held by the Fund with an agreement to repurchase the securities at an agreed-upon price, date andinterest payment. Reverse repurchase agreements involve the risk that the other party may fail to return thesecurities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and thevalue of the collateral held by the Fund, including the value of the investments made with cash collateral, is lessthan the value of the securities. These events could also trigger adverse tax consequences to the Fund.

� U.S. Government Issuer Risk (Low Duration Fund) — Treasury obligations may differ in their interest rates,maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authoritiesare supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S.

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Government. No assurance can be given that the U.S. Government will provide financial support to its agencies andauthorities if it is not obligated by law to do so.

Each Fund may also be subject to certain other non-principal risks associated with its investments and investmentstrategies, including:

� Collateralized Debt Obligations Risk (Low Duration Fund) — In addition to the typical risks associated with fixed-income securities and asset-backed securities, CDOs carry additional risks including, but not limited to: (i) thepossibility that distributions from collateral securities will not be adequate to make interest or other payments;(ii) the risk that the collateral may default or decline in value or be downgraded, if rated by a nationally recognizedstatistical rating organization; (iii) the Fund may invest in tranches of CDOs that are subordinate to other tranches;(iv) the structure and complexity of the transaction and the legal documents could lead to disputes among investorsregarding the characterization of proceeds; (v) the investment return achieved by the Fund could be significantlydifferent than those predicted by financial models; (vi) the lack of a readily available secondary market for CDOs;(vii) the risk of forced “fire sale” liquidation due to technical defaults such as coverage test failures; and (viii) theCDO’s manager may perform poorly. In addition, investments in CDOs may be characterized by the Fund as illiquidsecurities.

� Common Stock Risk (High Yield Fund) — Common stocks represent equity ownership in a company. Stock marketsare volatile. The price of common stock will fluctuate and can decline and reduce the value of a portfolio investing inequities. The value of common stock purchased by the Fund could decline if the financial condition of thecompanies the Fund invests in declines or if overall market and economic conditions deteriorate. The value of equitysecurities may also decline due to factors that affect a particular industry or industries, such as labor shortages oran increase in production costs and competitive conditions within an industry. In addition, the value may declinedue to general market conditions that are not specifically related to a company or industry, such as real orperceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interestor currency rates or generally adverse investor sentiment.

� Cyber Security Risk — Failures or breaches of the electronic systems of the Fund, the Fund’s adviser, distributor,and other service providers, or the issuers of securities in which the Fund invests have the ability to causedisruptions and negatively impact the Fund’s business operations, potentially resulting in financial losses to theFund and its shareholders. While the Fund has established business continuity plans and risk management systemsseeking to address system breaches or failures, there are inherent limitations in such plans and systems.Furthermore, the Fund cannot control the cyber security plans and systems of the Fund’s service providers orissuers of securities in which the Fund invests.

� Expense Risk — Fund expenses are subject to a variety of factors, including fluctuations in the Fund’s net assets.Accordingly, actual expenses may be greater or less than those indicated. For example, to the extent that the Fund’snet assets decrease due to market declines or redemptions, the Fund’s expenses will increase as a percentage ofFund net assets. During periods of high market volatility, these increases in the Fund’s expense ratio could besignificant.

� Investment in Other Investment Companies Risk — As with other investments, investments in other investmentcompanies, including ETFs, are subject to market and selection risk. In addition, if the Fund acquires shares ofinvestment companies, including ones affiliated with the Fund, shareholders bear both their proportionate share ofexpenses in the Fund (including management and advisory fees) and, indirectly, the expenses of the investmentcompanies (to the extent not offset by BlackRock through waivers). To the extent the Fund is held by an affiliatedfund, the ability of the Fund itself to hold other investment companies may be limited.

� Valuation Risk — The price the Fund could receive upon the sale of any particular portfolio investment may differfrom the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or thatare valued using a fair valuation methodology or a price provided by an independent pricing service. As a result, theprice received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund couldrealize a greater than expected loss or lesser than expected gain upon the sale of the investment. Pricing servicesthat value fixed-income securities generally utilize a range of market-based and security-specific inputs andassumptions, as well as considerations about general market conditions, to establish a price. Pricing servicesgenerally value fixed-income securities assuming orderly transactions of an institutional round lot size, but may beheld or transactions may be conducted in such securities in smaller, odd lot sizes. Odd lots may trade at lowerprices than institutional round lots. The Fund’s ability to value its investments may also be impacted bytechnological issues and/or errors by pricing services or other third-party service providers.

� When-Issued and Delayed Delivery Securities and Forward Commitments Risk — When-issued and delayeddelivery securities and forward commitments involve the risk that the security the Fund buys will lose value prior toits delivery. There also is the risk that the security will not be issued or that the other party to the transaction will

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not meet its obligation. If this occurs, the Fund may lose both the investment opportunity for the assets it set asideto pay for the security and any gain in the security’s price.

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Account Information

How to Choose the Share Class that Best Suits Your Needs

The High Yield Fund currently offers multiple share classes (Investor C1 Shares in this prospectus), and the LowDuration Fund currently offers multiple share classes (Investor A1, Investor C2 and Investor C3 Shares in thisprospectus), each with its own sales charge and expense structure, allowing you to invest in the way that best suitsyour needs. Each share class represents an ownership interest in the same portfolio investments of a particular Fund.

Investor C1 Shares of the High Yield Fund, and Investor A1, Investor C2 and Investor C3 Shares of the Low DurationFund are closed to new investors and subsequent purchases, except for those invested in certain employer-sponsoredretirement plans and for dividend and capital gain reinvestment by existing shareholders.

Effective on or about February 24, 2020, all of the issued and outstanding Investor C1 Shares of the High Yield Fundand all of the issued and outstanding Investor C2 and C3 Shares of the Low Duration Fund will be converted intoInvestor A Shares of the High Yield Fund and Low Duration Fund, respectively.

Each Fund’s shares are distributed by BlackRock Investments, LLC (the “Distributor”), an affiliate of BlackRock.

Additional details of certain share classes including reduced sales charge information and sales charge waivers areprovided below.

Investor C1 Shares, Investor C2 Shares and Investor C3 Shares will automatically convert to Investor A Sharesapproximately ten years after the date of purchase. The holding period includes the period Investor C1 Shares,Investor C2 Shares and Investor C3 Shares were held in the Predecessor Fund (as defined below). It is the FinancialIntermediary’s responsibility to ensure that the shareholder is credited with the proper holding period. As of theEffective Date (as defined below), certain Financial Intermediaries, including group retirement recordkeeping platforms,may not have been tracking such holding periods and therefore may not be able to process such conversions. In suchinstances, the automatic conversion of Investor C1 Shares, Investor C2 Shares and Investor C3 Shares to Investor AShares will occur ten years after the Effective Date.

Details About the Share Classes

Investor A1 Shares — Initial Sales Charge OptionNo initial sales charge applies to Investor A1 Shares purchased by certain employer-sponsored retirement plans orbought through reinvestment of Fund dividends or capital gains by existing shareholders.

Investor C1, C2 and C3 Shares — Deferred Sales Charge OptionsNo deferred sales charge applies to Investor C1, Investor C2 and Investor C3 Shares redeemed by certain employer-sponsored retirement plans or to redemptions of shares acquired through reinvestment of dividends and capital gainsby existing shareholders.

Effective November 8, 2018 (the “Effective Date”), Investor C1 Shares, Investor C2 Shares and Investor C3 Shareswill automatically convert to Investor A Shares approximately ten years after the date of purchase. The holding periodincludes the period Investor C1 Shares, Investor C2 Shares and Investor C3 Shares were held in the PredecessorFund. It is the Financial Intermediary’s responsibility to ensure that the shareholder is credited with the proper holdingperiod. As of the Effective Date, certain Financial Intermediaries, including group retirement recordkeeping platforms,may not have been tracking such holding periods and therefore may not be able to process such conversions. In suchinstances, the automatic conversion of Investor C1 Shares, Investor C2 Shares and Investor C3 Shares to Investor AShares will occur ten years after the Effective Date. The automatic conversion of Investor C1 Shares, Investor C2Shares and Investor C3 Shares to Investor A Shares is not a taxable event for Federal income tax purposes. Pleaseconsult your Financial Intermediary for additional information.

Right of AccumulationInvestors have a “right of accumulation” under which any of the following may be combined with the amount of thecurrent purchase in determining whether an investor qualifies for a breakpoint and a reduced front-end sales charge:

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i. The current value of an investor’s existing Investor A and A1, Investor C, C1, C2 and C3, Investor P, Institutional,Class K and Premier Shares in most BlackRock Funds,

ii. The current value of an investor’s existing shares of certain unlisted closed-end management investmentcompanies sponsored and advised by BlackRock or its affiliates and

iii. The investment in the BlackRock CollegeAdvantage 529 Program by the investor or by or on behalf of theinvestor’s spouse and children.

Financial Intermediaries may value current holdings of their customers differently for purposes of determining whetheran investor qualifies for a breakpoint and a reduced front-end sales charge, although customers of the same FinancialIntermediary will be treated similarly. In order to use this right, the investor must alert BlackRock to the existence ofany previously purchased shares.

Distribution and Shareholder Servicing Payments

Plan PaymentsBlackRock Funds V (the “Trust”), on behalf of the Funds, has adopted a plan (the “Plan”) pursuant to Rule 12b-1 underthe Investment Company Act with respect to the Investor C1, C2 and C3 Shares that allows a Fund to pay distributionfees for the sale of its shares and/or shareholder servicing fees for certain services provided to its shareholders.

Under the Plan, Investor C1, Investor C2 and Investor C3 Shares pay a distribution fee to the Distributor and/or itsaffiliates for distribution and sales support services. The distribution fees may be used to pay the Distributor fordistribution and sales support services and to pay the Distributor and BlackRock and its affiliates for sales supportservices provided and related expenses incurred in connection with the sale of Investor C1, Investor C2 andInvestor C3 Shares. The distribution fees may also be used to pay Financial Intermediaries for sales support servicesand related expenses. All Investor C1, Investor C2 and Investor C3 Shares pay a maximum distribution fee per yearthat is a percentage of the average daily net asset value of the respective Fund attributable to Investor C1, Investor C2and Investor C3 Shares. Investor A1 Shares do not pay a distribution fee.

Under the Plan, Investor A1, Investor C1, Investor C2 and Investor C3 Shares (collectively, “Prime Shares”), also payshareholder servicing fees (also referred to as general shareholder liaison services fees) to Financial Intermediariesfor providing support services to their customers who own Prime Shares of a Fund. The shareholder servicing feepayment is calculated as a percentage of the average daily net asset value of Prime Shares of a Fund. All PrimeShares pay a shareholder servicing fee.

In return for the shareholder servicing fee, Financial Intermediaries (including BlackRock) may provide one or more ofthe following services to their customers who own Prime Shares:

� Answering customer inquiries regarding account status and history, the manner in which purchases, exchanges andredemptions or repurchases of shares may be effected and certain other matters pertaining to the customers’investments;

� Assisting customers in designating and changing dividend options, account designations and addresses; and

� Providing other similar shareholder liaison services.

The shareholder servicing fees payable pursuant to the Plan are paid to compensate Financial Intermediaries for theadministration and servicing of shareholder accounts and are not costs which are primarily intended to result in thesale of a Fund’s shares. Because the fees paid by a Fund under the Plan are paid out of Fund assets on an ongoingbasis, over time these fees will increase the cost of your investment and may cost you more than paying other types ofsales charges. In addition, the distribution fees paid by Investor C1, Investor C2 and Investor C3 Shares may over timecost investors more than the front-end sales charge on Investor A Shares. For more information on the Plan, includinga complete list of services provided thereunder, see the SAI.

Other Payments by the FundsIn addition to fees that a Fund may pay to a Financial Intermediary pursuant to the Plan and fees a Fund pays to itstransfer agent, BNY Mellon Investment Servicing (US) Inc. (the “Transfer Agent”), BlackRock, on behalf of a Fund, mayenter into non-Plan agreements with affiliated and unaffiliated Financial Intermediaries pursuant to which a Fund willpay a Financial Intermediary for administrative, networking, recordkeeping, sub-transfer agency, sub-accounting and/orshareholder services. These non-Plan payments are generally based on either (1) a percentage of the average daily netassets of Fund shareholders serviced by a Financial Intermediary or (2) a fixed dollar amount for each accountserviced by a Financial Intermediary. The aggregate amount of these payments may be substantial.

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Other Payments by BlackRockFrom time to time, BlackRock, the Distributor or their affiliates also may pay a portion of the fees for administrative,networking, recordkeeping, sub-transfer agency, sub-accounting and shareholder services described above at its ortheir own expense and out of its or their profits. BlackRock, the Distributor and their affiliates may also compensateaffiliated and unaffiliated Financial Intermediaries for the sale and distribution of shares of the Funds. These paymentswould be in addition to the Fund payments described in this prospectus and may be a fixed dollar amount, may bebased on the number of customer accounts maintained by the Financial Intermediary, may be based on a percentageof the value of shares sold to, or held by, customers of the Financial Intermediary or may be calculated on anotherbasis. The aggregate amount of these payments by BlackRock, the Distributor and their affiliates may be substantialand, in some circumstances, may create an incentive for a Financial Intermediary, its employees or associatedpersons to recommend or sell shares of a Fund to you.

Please contact your Financial Intermediary for details about payments it may receive from a Fund or from BlackRock,the Distributor or their affiliates. For more information, see the SAI.

How to Buy, Sell, Exchange and Transfer Shares

The chart on the following pages summarizes how to buy, sell, exchange and transfer shares through your FinancialIntermediary. You may also buy, sell, exchange and transfer shares through BlackRock if your account is held directlywith BlackRock. To learn more about buying, selling, exchanging or transferring shares through BlackRock, call(800) 441-7762. Because the selection of a mutual fund involves many considerations, your Financial Intermediarymay help you with this decision.

With certain limited exceptions, the Funds are generally available only to investors residing in the United States andmay not be distributed by a foreign Financial Intermediary. Under this policy, in order to accept new accounts oradditional investments (including by way of exchange from another BlackRock Fund) into existing accounts, a Fundgenerally requires that (i) a shareholder that is a natural person be a U.S. citizen or resident alien, in each caseresiding within the United States or a U.S. territory (including APO/FPO/DPO addresses), and have a valid U.S.taxpayer identification number, and (ii) a Financial Intermediary or a shareholder that is an entity be domiciled in theUnited States and have a valid U.S. taxpayer identification number or be domiciled in a U.S. territory and have a validU.S. taxpayer identification number or IRS Form W-8. Any existing account that is updated to reflect a non-U.S. addresswill also be restricted from making additional investments.

Each Fund may reject any purchase order, modify or waive the minimum initial or subsequent investment requirementsfor any shareholders and suspend and resume the sale of any share class of the Fund at any time for any reason. Inaddition, the Funds may waive certain requirements regarding the purchase, sale, exchange or transfer of sharesdescribed below.

Under certain circumstances, if no activity occurs in an account within a time period specified by state law, ashareholder’s shares in the Fund may be transferred to that state.

How to Buy Investor A1, Investor C1, Investor C2 or Investor C3 SharesInvestor A1, C1, C2 and C3 Shares are available only for purchase by certain employer-sponsored retirement plansand for dividend and capital gain reinvestment by existing shareholders.

How to Buy SharesYour Choices Important Information for You to Know

Add to YourInvestment

First, have your FinancialIntermediary submit yourpurchase order.

Since purchases are limited to certain employer-sponsored retirementplans, contact your Financial Intermediary to see if you qualify.The price of your shares is based on the next calculation of the Fund’snet asset value after your order is placed. Any purchase orders placedprior to the close of business on the New York Stock Exchange(“NYSE”) (generally 4:00 p.m. Eastern time) will be priced at the netasset value determined that day. Purchase orders placed after that timewill be priced at the net asset value determined on the next businessday. Certain Financial Intermediaries, however, may require submissionof orders prior to that time. A broker-dealer or financial institutionmaintaining the account in which you hold shares may charge aseparate account, service or transaction fee on the purchase or sale ofFund shares that would be in addition to the fees and expenses shownin the Fund’s “Fees and Expenses” table.

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Your Choices Important Information for You to Know

Add to YourInvestment(continued)

First, have your FinancialIntermediary submit yourpurchase order. (continued)

The Fund may reject any order to buy shares and may suspend the saleof shares at any time. Certain Financial Intermediaries may charge aprocessing fee to confirm a purchase.

Acquire additional shares byreinvesting dividends and capitalgains

All dividends and capital gains distributions are automaticallyreinvested without a sales charge. To make any changes to yourdividend and/or capital gains distributions options, please call(800) 441-7762 or contact your Financial Intermediary (if your accountis not held directly with BlackRock).

How to Pay forShares

Making payment for purchases Payment for an order must be made in Federal funds or otherimmediately available funds by the time specified by your FinancialIntermediary, but in no event later than 4:00 p.m. (Eastern time) onthe second business day following BlackRock’s receipt of the order. Ifpayment is not received by this time, the order will be canceled andyou and your Financial Intermediary will be responsible for any loss tothe Fund.

How to Sell SharesYour Choices Important Information for You to Know

Full or PartialRedemption ofShares

Have your Financial Intermediarysubmit your sales order

You can make redemption requests through your FinancialIntermediary. Shareholders should indicate whether they areredeeming Investor A1, C1, C2 and C3 Shares. The price of yourshares is based on the next calculation of the Fund’s net asset valueafter your order is placed. For your redemption request to be priced atthe net asset value on the day of your request, you must submit yourrequest to your Financial Intermediary prior to that day’s close ofbusiness on the NYSE (generally 4:00 p.m. Eastern time). CertainFinancial Intermediaries, however, may require submission of ordersprior to that time. Any redemption request placed after that time will bepriced at the net asset value at the close of business on the nextbusiness day.Regardless of the method the Fund uses to make payment of yourredemption proceeds (check, wire or ACH), your redemption proceedstypically will be sent one to two business days after your request issubmitted, but in any event, within seven days.Certain Financial Intermediaries may charge a fee to process aredemption of shares. Shareholders who hold more than one classshould indicate which class of shares they are redeeming.The Fund may reject an order to sell shares under certaincircumstances.

Selling shares held directly withBlackRock

Methods of RedeemingRedeem by Telephone: You may redeem shares held directly withBlackRock by telephone request if certain conditions are met and if theamount being sold is less than (i) $100,000 for payments by check or(ii) $250,000 for payments through the Automated Clearing House(ACH) or wire transfer. Certain redemption requests, such as those inexcess of these amounts, must be in writing with a medallion signatureguarantee. Call (800) 441-7762 for details.You can obtain a medallion signature guarantee stamp from a bank,securities dealer, securities broker, credit union, savings and loanassociation, national securities exchange or registered securitiesassociation. A notary public seal will not be acceptable.The Fund, its administrators and the Distributor will employ reasonableprocedures to confirm that instructions communicated by telephone aregenuine. The Fund and its service providers will not be liable for anyloss, liability, cost or expense for acting upon telephone instructionsthat are reasonably believed to be genuine in accordance with suchprocedures. The Fund may refuse a telephone redemption request if itbelieves it is advisable to do so.During periods of substantial economic or market change, telephoneredemptions may be difficult to complete. Please find alternative

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Full or PartialRedemption ofShares (continued)

Selling shares held directly withBlackRock (continued)

redemption methods below.Redeem by VRU: Investor Shares may also be redeemed by use of theFunds’ automated voice response unit service (“VRU”). Payment forInvestor Shares redeemed by VRU may be made for non-retirementaccounts in amounts up to $25,000, either through check, ACH or wire.Redeem by Internet: You may redeem in your account, by logging ontothe BlackRock website at www.blackrock.com. Proceeds from Internetredemptions may be sent via check, ACH or wire to the bank account ofrecord. Payment for Investor Shares redeemed by Internet may bemade for non-retirement accounts in amounts up to $25,000, eitherthrough check, ACH or wire.Redeem in Writing: You may sell shares held at BlackRock by writing toBlackRock, P.O. Box 9819, Providence, Rhode Island 02940-8019 orfor overnight delivery, 4400 Computer Drive, Westborough,Massachusetts 01581. All shareholders on the account must sign theletter. Under certain circumstances, a medallion signature guaranteewill be required call (800) 441-7762 for details. You can obtain amedallion signature guarantee stamp from a bank, securities dealer,securities broker, credit union, savings and loan association, nationalsecurities exchange or registered securities association. A notary publicseal will not be acceptable. If you hold stock certificates, return thecertificates with the letter. Proceeds from redemptions may be sent viacheck, ACH or wire to the bank account of record.Payment of Redemption Proceeds:Redemption proceeds may be paid by check or, if the Fund has verifiedbanking information on file, through ACH or by wire transfer.Payment by Check: BlackRock will normally mail redemption proceedswithin three business days following receipt of a properly completedrequest, but in any event within seven days.Shares can be redeemed by telephone and the proceeds sent by checkto the shareholder at the address on record. Shareholders will pay $15for redemption proceeds sent by check via overnight mail. You areresponsible for any additional charges imposed by your bank for thisservice.Each Fund reserves the right to reinvest any dividend or distributionamounts (e.g., income dividends or capital gains) which you haveelected to receive by check should your check be returned asundeliverable or remain uncashed for more than 6 months. No interestwill accrue on amounts represented by uncashed checks. Your checkwill be reinvested in your account at the net asset value nextcalculated, on the day of the investment. When reinvested, thoseamounts are subject to the risk of loss like any Fund investment. If youelect to receive distributions in cash and a check remains undeliverableor uncashed for more than 6 months, your cash election may also bechanged automatically to reinvest and your future dividend and capitalgains distributions will be reinvested in the Fund at the net asset valueas of the date of payment of the distribution.Payment by Wire Transfer: Payment for redeemed shares for which aredemption order is received before 4:00 p.m. (Eastern time) on abusiness day is normally made in Federal funds wired to the redeemingshareholder on the next business day, provided that the Fund’scustodian is also open for business. Payment for redemption ordersreceived after 4:00 p.m. (Eastern time) or on a day when the Fund’scustodian is closed is normally wired in Federal funds on the nextbusiness day following redemption on which the Fund’s custodian isopen for business. The Fund reserves the right to wire redemptionproceeds within seven days after receiving a redemption order if, in thejudgment of the Fund, an earlier payment could adversely affect theFund.If a shareholder has given authorization for expedited redemption,shares can be redeemed by Federal wire transfer to a single previously

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Full or PartialRedemption ofShares (continued)

Selling shares held directly withBlackRock (continued)

designated bank account. Shareholders will pay $7.50 for redemptionproceeds sent by Federal wire transfer. You are responsible for anyadditional charges imposed by your bank for this service.The Fund is not responsible for the efficiency of the Federal wiresystem or the shareholder’s firm or bank. To change the name of thesingle, designated bank account to receive wire redemption proceeds, itis necessary to send a written request to the Fund at the address onthe back cover of this prospectus.Payment by ACH: Redemption proceeds may be sent to theshareholder’s bank account (checking or savings) via ACH. Payment forredeemed shares for which a redemption order is received before4:00 p.m. (Eastern time) on a business day is normally sent to theredeeming shareholder the next business day, with receipt at thereceiving bank within the next two business days (48-72 hours);provided that the Fund’s custodian is also open for business. Paymentfor redemption orders received after 4:00 p.m. (Eastern time) or on aday when the Fund’s custodian is closed is normally sent on the nextbusiness day following redemption on which the Fund’s custodian isopen for business.The Fund reserves the right to send redemption proceeds within sevendays after receiving a redemption order if, in the judgment of the Fund,an earlier payment could adversely affect the Fund. No charge forsending redemption payments via ACH is imposed by the Fund.

***Note on Expedited Redemptions: Once authorization for expeditedredemptions is on file, a Fund will honor requests by telephone at(800) 441-7762. A Fund may alter the terms of or terminate thisexpedited redemption privilege at any time for any reason.If you make a redemption request before the Fund has collectedpayment for the purchase of shares, the Fund may delay mailing yourproceeds. This delay will usually not exceed ten days.

RedemptionProceeds

Under normal circumstances, each Fund expects to meet redemptionrequests by using cash or cash equivalents in its portfolio or by sellingportfolio assets to generate cash. During periods of stressed marketconditions, when a significant portion of the Fund’s portfolio may becomprised of less-liquid investments, the Fund may be more likely tolimit cash redemptions and may determine to pay redemptionproceeds by (i) borrowing under a line of credit it has entered into witha group of lenders, (ii) borrowing from another BlackRock Fundpursuant to an interfund lending program, to the extent permitted bythe Fund’s investment policies and restrictions as set forth in the SAI,and/or (iii) transferring portfolio securities in-kind to you. The SAIincludes more information about the Fund’s line of credit and interfundlending program, to the extent applicable.If the Fund pays redemption proceeds by transferring portfoliosecurities in-kind to you, you may pay transaction costs to dispose ofthe securities, and you may receive less for them than the price atwhich they were valued for purposes of redemption.

How to Exchange Shares or Transfer Your AccountYour Choices Important Information for You to Know

Exchange Privilege Selling shares of one BlackRockFund to purchase shares ofanother BlackRock Fund(“exchanging”)

Investor A1, Investor C1 or Investor C2 Shares of the Funds mayexchange out to Investor A or C Shares, respectively, of anotherBlackRock Fund, to the extent such shares are offered by yourFinancial Intermediary.You can exchange $1,000 or more of Investor A1, C1, C2 and C3Shares from one fund into Investor A, Investor B or Investor C Shares,respectively, of another fund which offers that class of shares (you canexchange less than $1,000 of Investor A1, C1, C2 or C3 Shares if youalready have an account in the fund into which you are exchanging).

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Exchange Privilege(continued)

Selling shares of one BlackRockFund to purchase shares ofanother BlackRock Fund(“exchanging”) (continued)

You may only exchange into a share class and fund that are open tonew investors or in which you have a current account if the fund isclosed to new investors.Some of the BlackRock Funds impose a different deferred sales chargeschedule. The CDSC will continue to be measured from the date of theoriginal purchase and will not be affected by the exchange. The CDSCschedule applicable to your original purchase will apply to the sharesyou receive in the exchange and any subsequent exchange.To exercise the exchange privilege, you may contact your FinancialIntermediary. Alternatively, if your account is held directly withBlackRock, you may:(i) call (800) 441-7762 and speak with one of our representatives,(ii) make the exchange via the Internet by accessing your account onlineat www.blackrock.com, or(iii) send a written request to the Fund at the address on the back coverof this prospectus. Please note, if you indicated on your New AccountApplication that you did not want the Telephone Exchange Privilege, youwill not be able to place exchanges via the telephone until you updatethis option either in writing or by calling (800) 441-7762. The Fund hasthe right to reject any telephone request for any reason.Although there is currently no limit on the number of exchanges thatyou can make, the exchange privilege may be modified or terminated atany time in the future. The Fund may suspend or terminate yourexchange privilege at any time for any reason, including if the Fundbelieves, in its sole discretion, that you are engaging in market timingactivities. See “Short-Term Trading Policy” below.For U.S. federal income tax purposes a share exchange is a taxableevent and a capital gain or loss may be realized. Please consult yourtax adviser or other Financial Intermediary before making an exchangerequest.

Transfer Shares toAnother SecuritiesDealer or OtherFinancialIntermediary

Transfer to a participatingsecurities dealer or FinancialIntermediary

You may transfer your shares of the Fund only to another securitiesdealer that has entered into an agreement with the Distributor. Certainshareholder services may not be available for the transferred shares.All future trading of these assets must be coordinated by the receivingfirm.

Transfer to a non-participatingsecurities dealer or FinancialIntermediary

You must either:• Transfer your shares to an account with the Fund; or• Sell your shares, paying any applicable deferred sales charge.

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Account Services and Privileges

The following table provides examples of account services and privileges available in your BlackRock account. Certainof these account services and privileges are only available to shareholders of Investor Shares whose accounts areheld directly with BlackRock. If your account is held directly with BlackRock, please call (800) 441-7762 or visitwww.blackrock.com for additional information as well as forms and applications. Otherwise, please contact yourFinancial Intermediary for assistance in requesting one or more of the following services and privileges.

Dividend AllocationPlan

Automatically invests yourdistributions into anotherBlackRock Fund of your choicepursuant to your instructions,without any fees or salescharges.

Dividend and capital gains distributions may be reinvested in youraccount to purchase additional shares or paid in cash. Using theDividend Allocation Plan, you can direct your distributions to your bankaccount (checking or savings), to purchase shares of another fund atBlackRock without any fees or sales charges, or by check to a specialpayee. Please call (800) 441-7762 for details. If investing in anotherfund at BlackRock, the receiving fund must be open to new purchases.

SystematicExchange Plan

This feature can be used byinvestors to systematicallyexchange money from one fundto up to four other funds.

A minimum of $10,000 in the initial BlackRock Fund is required, andinvestments in any additional funds must meet minimum initialinvestment requirements. For more information, please call(800) 441-7762. See “Exchange Privilege” for information on whichclasses of a Fund you may exchange into.

SystematicWithdrawal Plan(“SWP”)

This feature can be used byinvestors who want to receiveregular distributions from theiraccounts.

To start an SWP, a shareholder must have a current investment of$10,000 or more in a BlackRock Fund. Shareholders can elect toreceive cash payments of $50 or more at any interval they choose.Shareholders may sign up by completing the SWP Application Form,which may be obtained from BlackRock. Shareholders should realizethat if withdrawals exceed income the invested principal in theiraccount will be depleted.To participate in the SWP, shareholders must have their dividendsreinvested. Shareholders may change or cancel the SWP at any time,with a minimum of 24 hours notice. If a shareholder purchasesadditional Investor A1 Shares of a fund at the same time he or sheredeems shares through the SWP, that investor may lost moneybecause of the sales charge involved. No CDSC will be assessed onredemptions of Investor A1, Investor C1, Investor C2 or Investor C3Shares made through the SWP that do not exceed 12% of the account’snet asset value on an annualized basis. For example, monthly,quarterly, and semi-annual SWP redemptions of Investor A1,Investor C1, Investor C2 or Investor C3 Shares will not be subject to theCDSC if they do not exceed 1%, 3% and 6%, respectively, of anaccount’s net asset value on the redemption date. SWP redemptions ofInvestor A1, Investor C1, Investor C2 or Investor C3 Shares in excess ofthis limit will still pay any applicable CDSC.Ask your Financial Intermediary for details.

Funds’ Rights

Each Fund may:

� Suspend the right of redemption if trading is halted or restricted on the NYSE or under other emergency conditionsdescribed in the Investment Company Act;

� Postpone the date of payment upon redemption if trading is halted or restricted on the NYSE or under otheremergency conditions described in the Investment Company Act or if a redemption request is made before the Fundhas collected payment for the purchase of shares;

� Redeem shares for property other than cash as may be permitted under the Investment Company Act; and

� Redeem shares involuntarily in certain cases, such as when the value of a shareholder account falls below aspecified level.

Note on Low Balance Accounts. Because of the high cost of maintaining smaller shareholder accounts, BlackRockhas set a minimum balance of $500 in each Fund position you hold within your account (the “Fund Minimum”), andmay redeem the shares in your account if the net asset value of those shares in your account falls below $500 for anyreason, including market fluctuation.

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You will be notified that the value of your account is less than the Fund Minimum before the Fund makes anyinvoluntary redemption. This notification will provide you with a 90 calendar day period to make an additionalinvestment in order to bring the value of your account to at least $500 before the Fund makes an involuntaryredemption. This involuntary redemption will not charge any deferred sales charge, and may not apply to accounts ofcertain employer-sponsored retirement plans (not including IRAs), qualified state tuition plan (529 Plan) accounts, andselect fee-based programs at your Financial Intermediary.

Participation in Fee-Based Programs

If you participate in certain fee-based programs offered by BlackRock or an affiliate of BlackRock or by FinancialIntermediaries that have agreements with the Distributor or in certain fee-based programs in which BlackRockparticipates, you may be able to buy Institutional Shares, including by exchanges from other share classes. Salescharges on the shares being exchanged may be reduced or waived under certain circumstances. You generally cannottransfer shares held through a fee-based program into another account. Instead, if you choose to leave the fee-basedprogram, you may have to redeem your shares held through the program and purchase shares of another class, whichmay be subject to distribution and service fees. This may be a taxable event and you may pay any applicable salescharges or redemption fees. Please speak to your Financial Intermediary for information about specific policies andprocedures applicable to your account.

Generally, upon termination of a fee-based program, the shares may be liquidated, or the shares can be held in anaccount. In certain instances, when a shareholder chooses to continue to hold the shares, whatever share class washeld in the program can be held after termination. Shares that have been held for less than specified periods withinthe program may be subject to a fee upon redemption. Please speak to your Financial Intermediary for moreinformation.

Certain Financial Intermediaries may, in connection with a change in account type (for example, due to leaving a fee-based program or upon termination of the fee-based program) or otherwise in accordance with the FinancialIntermediary’s policies and procedures, exchange the share class held in the program for another share class of thesame fund, provided that the exchanged shares are not subject to a sales charge and the shareholder meets theeligibility requirements of the new share class. Please speak to your Financial Intermediary for information aboutspecific policies and procedures applicable to your account.

Details about the features of each fee-based program and the relevant charges, terms and conditions are included inthe client agreement for each fee-based program and are available from your Financial Intermediary. Please speak toyour Financial Intermediary for more information.

Short-Term Trading Policy

The Board of Trustees (the “Board”) has determined that the interests of long-term shareholders and a Fund’s abilityto manage its investments may be adversely affected when shares are repeatedly bought, sold or exchanged inresponse to short-term market fluctuations — also known as “market timing.” The Funds are not designed for markettiming organizations or other entities using programmed or frequent purchases and sales or exchanges. The exchangeprivilege for Investor Shares and Institutional Shares is not intended as a vehicle for short-term trading. Excessivepurchase and sale or exchange activity may interfere with portfolio management, increase expenses and taxes andmay have an adverse effect on the performance of the Fund and its returns to shareholders. For example, large flowsof cash into and out of the Fund may require the management team to allocate a significant amount of assets to cashor other short-term investments or sell securities, rather than maintaining such assets in securities selected toachieve the Fund’s investment objective. Frequent trading may cause the Fund to sell securities at less favorableprices, and transaction costs, such as brokerage commissions, can reduce the Fund’s performance.

A fund’s investment in non-U.S. securities is subject to the risk that an investor may seek to take advantage of a delaybetween the change in value of the fund’s portfolio securities and the determination of the fund’s net asset value as aresult of different closing times of U.S. and non-U.S. markets by buying or selling fund shares at a price that does notreflect their true value. A similar risk exists for funds that invest in securities of small capitalization companies,securities of issuers located in emerging markets or high yield securities (junk bonds) that are thinly traded andtherefore may have actual values that differ from their market prices. This short-term arbitrage activity can reduce thereturn received by long-term shareholders. Each Fund will seek to eliminate these opportunities by using fair valuepricing, as described in “Management of the Funds — Valuation of Fund Investments” below.

Each Fund discourages market timing and seeks to prevent frequent purchases and sales or exchanges of Fundshares that it determines may be detrimental to the Fund or long-term shareholders. The Board has approved the

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policies discussed below to seek to deter market timing activity. The Board has not adopted any specific numericalrestrictions on purchases, sales and exchanges of Fund shares because certain legitimate strategies will not result inharm to the Fund or its shareholders.

If as a result of its own investigation, information provided by a Financial Intermediary or other third party, orotherwise, the Fund believes, in its sole discretion, that your short-term trading is excessive or that you are engagingin market timing activity, it reserves the right to reject any specific purchase or exchange order. If the Fund rejects yourpurchase or exchange order, you will not be able to execute that transaction, and the Fund will not be responsible forany losses you therefore may suffer. For transactions placed directly with the Fund, the Fund may consider the tradinghistory of accounts under common ownership or control for the purpose of enforcing these policies. Transactionsplaced through the same Financial Intermediary on an omnibus basis may be deemed part of a group for the purposeof this policy and may be rejected in whole or in part by the Fund. Certain accounts, such as omnibus accounts andaccounts at Financial Intermediaries, however, include multiple investors and such accounts typically provide the Fundwith net purchase or redemption and exchange requests on any given day where purchases, redemptions andexchanges of shares are netted against one another and the identity of individual purchasers, redeemers andexchangers whose orders are aggregated may not be known by the Fund. While the Funds monitor for market timingactivity, the Funds may be unable to identify such activities because the netting effect in omnibus accounts oftenmakes it more difficult to locate and eliminate market timers from the Funds. The Distributor has entered intoagreements with respect to Financial Intermediaries that maintain omnibus accounts with the Transfer Agent pursuantto which such Financial Intermediaries undertake to cooperate with the Distributor in monitoring purchase, exchangeand redemption orders by their customers in order to detect and prevent short-term or excessive trading in the Fund’sshares through such accounts. Identification of market timers may also be limited by operational systems andtechnical limitations. In the event that a Financial Intermediary is determined by the Fund to be engaged in markettiming or other improper trading activity, the Fund’s Distributor may terminate such Financial Intermediary’s agreementwith the Distributor, suspend such Financial Intermediary’s trading privileges or take other appropriate actions.

There is no assurance that the methods described above will prevent market timing or other trading that may bedeemed abusive.

Each Fund may from time to time use other methods that it believes are appropriate to deter market timing or othertrading activity that may be detrimental to the Fund or long-term shareholders.

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Management of the Funds

BlackRock

BlackRock, each Fund’s investment adviser, manages each Fund’s investments and its business operations subject tothe oversight of the Board of the Trust. While BlackRock is ultimately responsible for the management of each Fund, itis able to draw upon the trading, research and expertise of its asset management affiliates for portfolio decisions andmanagement with respect to certain portfolio securities. BlackRock is an indirect, wholly-owned subsidiary ofBlackRock, Inc.

BlackRock, a registered investment adviser, was organized in 1994 to perform advisory services for investmentcompanies. BlackRock International Limited (“BIL”), sub-adviser to each Fund, is a registered investment adviserorganized in 1995. BlackRock and its affiliates had approximately $7.429 trillion in investment company and otherportfolio assets under management as of December 31, 2019.

Each Fund has entered into a management agreement (the “Management Agreement”) with BlackRock. Under theManagement Agreement, BlackRock receives for its services to each Fund a fee at an annual rate based on eachFund’s average daily net assets.

High Yield FundWith respect to the High Yield Fund, the annual management fees payable to BlackRock (as a percentage of averagedaily net assets) are calculated as follows:

Rate ofManagement Fee

Average Daily Net Assets High Yield Fund

First $1 billion 0.500%

$1 billion – $2 billion 0.450%




Greater than $30 billion 0.350%

Low Duration FundWith respect to the Low Duration Fund, the annual management fees payable to BlackRock (as a percentage ofaverage daily net assets) are calculated as follows:

Rate ofManagement Fee

Average Daily Net Assets Low Duration Fund

First $1 billion 0.310%




Greater than $10 billion 0.260%

For the fiscal year ended September 30, 2019, the aggregate management fees, net of any applicable waivers, paid byeach Fund to BlackRock as a percentage of the Fund’s average daily net assets were:

High Yield Fund 0.41%

Low Duration Fund 0.28%

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BlackRock has contractually agreed to waive the management fee with respect to any portion of each Fund’s assetsestimated to be attributable to investments in other equity and fixed-income mutual funds and ETFs managed byBlackRock or its affiliates that have a contractual management fee, through January 31, 2021. In addition, BlackRockhas contractually agreed to waive its management fees by the amount of investment advisory fees each Fund pays toBlackRock indirectly through its investment in money market funds managed by BlackRock or its affiliates (the“affiliated money market fund waiver”) through January 31, 2021. The contractual agreements may be terminatedupon 90 days’ notice by a majority of the non-interested trustees of the Trust or by a vote of a majority of theoutstanding voting securities of each Fund.

BlackRock has entered into a separate sub-advisory agreement with BIL, an affiliate of BlackRock, with respect toeach Fund. Under each sub-advisory agreement, BlackRock pays BIL for services it provides for that portion of eachFund for which it acts as sub-adviser a fee equal to a percentage of the management fee paid to BlackRock under theManagement Agreement with respect to the applicable Fund.

BlackRock has agreed to cap net expenses (excluding (i) interest, taxes, dividends tied to short sales, brokeragecommissions, and other expenditures which are capitalized in accordance with generally accepted accountingprinciples; (ii) expenses incurred directly or indirectly by the Funds as a result of investments in other investmentcompanies and pooled investment vehicles; (iii) other expenses attributable to, and incurred as a result of, the Funds’investments; and (iv) extraordinary expenses (including litigation expenses) not incurred in the ordinary course of theFunds’ business, if any) of each share class of the Funds at the levels shown below and in a Fund’s fees andexpenses table in the “Fund Overview” section of this prospectus. Items (i), (ii), (iii) and (iv) in the preceding sentenceare referred to in this prospectus as “Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses andcertain other Fund expenses.” To achieve these expense caps, BlackRock has agreed to waive and/or reimburse feesor expenses if these operating expenses exceed a certain limit.

With respect to each Fund, BlackRock has contractually agreed to waive and/or reimburse fees or expenses in order tolimit Total Annual Fund Operating Expenses to the amounts noted in the table below.

Contractual Caps1 onTotal Annual Fund

Operating Expenses2

(excluding DividendExpense, Interest

Expense, Acquired FundFees and Expenses and

certain other Fund expenses)

High Yield Fund

Investor C1 Shares 1.56%

Low Duration Fund

Investor A1 Shares 0.50%

Investor C2 Shares 0.80%

Investor C3 Shares 1.30%1 The contractual caps are in effect through January 31, 2021. The contractual agreements

may be terminated upon 90 days’ notice by a majority of the non-interested trustees of theTrust or by a vote of a majority of the outstanding voting securities of each Fund.

2 As a percentage of average daily net assets.

The amount of the contractual waivers and/or reimbursements of fees and expenses made pursuant to the contractualcaps on net expenses will be reduced by the amount of the affiliated money market fund waiver.

As stated above, the waivers and reimbursements made pursuant to the contractual expense caps and described inthe table above do not include Interest Expense. A Fund’s Interest Expense is required to be reported as part ofoperating expenses in such Fund’s expense table for accounting purposes. A Fund incurs Interest Expense whenmaking certain investments (e.g., tender option bonds) to seek to enhance the yield and total return of the portfolio.The amount of Interest Expense (if any) will fluctuate with a Fund’s use of those investments.

A discussion of the basis for the Board’s approval of the Management Agreement with BlackRock with respect to eachof the Funds is included in the respective Fund’s annual shareholder report for the fiscal year endedSeptember 30, 2019. A discussion of the basis of the Board’s approval of the sub-advisory agreements betweenBlackRock and BIL with respect to the High Yield Fund and the Low Duration Fund will be included in the respectiveFund’s semiannual shareholder report for the period ending March 31, 2020.

From time to time, a manager, analyst, or other employee of BlackRock or its affiliates may express views regarding aparticular asset class, company, security, industry, or market sector. The views expressed by any such person are the

41

views of only that individual as of the time expressed and do not necessarily represent the views of BlackRock or anyother person within the BlackRock organization. Any such views are subject to change at any time based upon marketor other conditions and BlackRock disclaims any responsibility to update such views. These views may not be relied onas investment advice and, because investment decisions for each Fund are based on numerous factors, may not berelied on as an indication of trading intent on behalf of a Fund.

Legal Proceedings. On May 27, 2014, certain investors in the BlackRock Global Allocation Fund, Inc. (“GlobalAllocation”) and the BlackRock Equity Dividend Fund (“Equity Dividend”) filed a consolidated complaint in the UnitedStates District Court for the District of New Jersey against BlackRock Advisors, LLC, BlackRock InvestmentManagement, LLC and BlackRock International Limited (collectively, the “Defendants”) under the caption In reBlackRock Mutual Funds Advisory Fee Litigation. In the lawsuit, which purports to be brought derivatively on behalf ofGlobal Allocation and Equity Dividend, the plaintiffs allege that the Defendants violated Section 36(b) of the InvestmentCompany Act by receiving allegedly excessive investment advisory fees from Global Allocation and Equity Dividend. OnJune 13, 2018, the court granted in part and denied in part the Defendants’ motion for summary judgment. OnJuly 25, 2018, the plaintiffs served a pleading that supplemented the time period of their alleged damages to runthrough the date of trial. The lawsuit seeks, among other things, to recover on behalf of Global Allocation and EquityDividend all allegedly excessive advisory fees received by the Defendants beginning twelve months preceding the startof the lawsuit with respect to each of Global Allocation and Equity Dividend and ending on the date of judgment, alongwith purported lost investment returns on those amounts, plus interest. The Defendants believe the claims in thelawsuit are without merit. The trial on the remaining issues was completed on August 29, 2018. On February 8, 2019,the court issued an order dismissing the claims in their entirety. On March 8, 2019, the plaintiffs provided notice thatthey are appealing both the February 8, 2019 post-trial order and the June 13, 2018 order partially grantingDefendants’ motion for summary judgment.

Portfolio Manager Information

Information regarding the portfolio managers of each Fund is set forth below. Further information regarding theportfolio managers, including other accounts managed, compensation, ownership of Fund shares, and possibleconflicts of interest, is available in the Funds’ SAI.

High Yield Fund

The High Yield Fund is managed by a team of financial professionals. James Keenan, CFA, is jointly and primarilyresponsible for setting the Fund’s overall investment strategy and overseeing the Fund’s investment process andperformance. Mitchell Garfin, CFA, David Delbos and Derek Schoenhofen are jointly and primarily responsible for theday-to-day management of the Fund.

Portfolio Manager Primary Role Since* Title and Recent Biography

James Keenan, CFA Jointly and primarily responsible forsetting the Fund’s overall investmentstrategy and overseeing the Fund’sinvestment process andperformance.

2007 Managing Director of BlackRock, Inc. since2008, Co-Head of Global Credit and Head ofthe Leveraged Finance Portfolio Team; Head ofGlobal Credit from 2015 to 2017; Director ofBlackRock, Inc. from 2006 to 2007.

Mitchell Garfin, CFA Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio, including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2009 Managing Director of BlackRock, Inc. since2009 and Co-Head of U.S. Leveraged Finance;Director of BlackRock, Inc. from 2005 to2008.

David Delbos Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio, including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2014 Managing Director of BlackRock, Inc. since2012 and Co-Head of U.S. Leveraged Finance;Director of BlackRock, Inc. from 2007 to2011; Vice President of BlackRock, Inc. from2005 to 2006.

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Derek Schoenhofen Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio, including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2009 Managing Director of BlackRock, Inc. since2019; Director of BlackRock, Inc. from 2006to 2018; Vice President of BlackRock, Inc.from 2000 to 2005.

* Includes management of the High Yield Predecessor Fund (as defined below).

Low Duration FundThe Low Duration Fund is managed by a team of financial professionals. Thomas Musmanno, CFA and ScottMacLellan, CFA are jointly and primarily responsible for the day-to-day management of the Fund.


Thomas Musmanno,CFA

Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2008 Managing Director of BlackRock, Inc. since2010; Director of BlackRock, Inc. from 2006to 2009.

Scott MacLellan, CFA Jointly and primarily responsible forthe day-to-day management of theFund’s portfolio, including setting theFund’s overall investment strategyand overseeing the management ofthe Fund.

2012 Director of BlackRock, Inc. since 2010; VicePresident of BlackRock, Inc. from 2007 to2009.

* Includes management of the Low Duration Predecessor Fund (as defined below).

Conflicts of Interest

The investment activities of BlackRock and its affiliates (including BlackRock, Inc. and its subsidiaries (collectively, the“Affiliates”)), The PNC Financial Services Group, Inc. (which, through a subsidiary, has a significant economic interestin BlackRock, Inc.) and its subsidiaries (each with The PNC Financial Services Group, Inc., an “Entity” and collectively,the “Entities”), and their respective directors, officers or employees, in the management of, or their interest in, theirown accounts and other accounts they manage, may present conflicts of interest that could disadvantage the Fundsand their shareholders.

BlackRock, its Affiliates and the Entities provide investment management services to other funds and discretionarymanaged accounts that may follow investment programs similar to that of the Funds. BlackRock, its Affiliates and theEntities are involved worldwide with a broad spectrum of financial services and asset management activities and mayengage in the ordinary course of business in activities in which their interests or the interests of their clients mayconflict with those of the Funds. BlackRock or one or more Affiliates or Entities act or may act as an investor,investment banker, research provider, investment manager, commodity pool operator, commodity trading advisor,financier, underwriter, adviser, market maker, trader, prime broker, lender, index provider, agent and/or principal, andhave other direct and indirect interests in securities, currencies, commodities, derivatives and other instruments inwhich the Funds may directly or indirectly invest. Thus, it is likely that the Funds will have multiple businessrelationships with and will invest in, engage in transactions with, make voting decisions with respect to, or obtainservices from, entities for which an Affiliate or an Entity performs or seeks to perform investment banking or otherservices. Specifically, the Funds may invest in securities of, or engage in other transactions with, companies withwhich an Affiliate or an Entity has developed or is trying to develop investment banking relationships or in which anAffiliate or an Entity has significant debt or equity investments or other interests. The Funds may also invest inissuances (such as structured notes) by entities for which an Affiliate or an Entity provides and is compensated forcash management services relating to the proceeds from the sale of such issuances. The Funds also may invest insecurities of, or engage in other transactions with, companies for which an Affiliate or an Entity provides or may in thefuture provide research coverage. An Affiliate or Entity may have business relationships with, and purchase, ordistribute or sell services or products from or to, distributors, consultants or others who recommend the Funds or whoengage in transactions with or for the Funds, and may receive compensation for such services. The Funds may alsomake brokerage and other payments to Entities in connection with the Funds’ portfolio investment transactions.BlackRock or one or more Affiliates or Entities may engage in proprietary trading and advise accounts and funds thathave investment objectives similar to those of the Funds and/or that engage in and compete for transactions in the

43

same types of securities, currencies and other instruments as the Funds. This may include transactions in securitiesissued by other open-end and closed-end investment companies (which may include investment companies that areaffiliated with the Funds and BlackRock, to the extent permitted under the Investment Company Act). The tradingactivities of BlackRock and these Affiliates or Entities are carried out without reference to positions held directly orindirectly by the Funds and may result in BlackRock or an Affiliate or an Entity having positions in certain securitiesthat are senior or junior to, or have interests different from or adverse to, the securities that are owned by the Funds.

Neither BlackRock nor any Affiliate is under any obligation to share any investment opportunity, idea or strategy withthe Funds. As a result, an Affiliate may compete with the Funds for appropriate investment opportunities. The resultsof a Fund’s investment activities, therefore, may differ from those of an Affiliate and of other accounts managed by anAffiliate, and it is possible that a Fund could sustain losses during periods in which one or more Affiliates and otheraccounts achieve profits on their trading for proprietary or other accounts. The opposite result is also possible.

In addition, the Funds may, from time to time, enter into transactions in which BlackRock or an Affiliate or an Entity ortheir directors, officers or employees or other clients have an adverse interest. Furthermore, transactions undertakenby clients advised or managed by BlackRock, its Affiliates or Entities may adversely impact the Funds. Transactions byone or more clients or BlackRock, its Affiliates or Entities or their directors, officers or employees, may have the effectof diluting or otherwise disadvantaging the values, prices or investment strategies of the Funds. The Funds’ activitiesmay be limited because of regulatory restrictions applicable to BlackRock, one or more Affiliates or Entities and/ortheir internal policies designed to comply with such restrictions.

Under a securities lending program approved by the Board, the Trust, on behalf of the Funds, has retained BlackRockInvestment Management, LLC (“BIM”), an Affiliate of BlackRock, to serve as the securities lending agent for the Fundsto the extent that the Funds participate in the securities lending program. For these services, the securities lendingagent will receive a fee from the Funds, including a fee based on the returns earned on the Funds’ investment of thecash received as collateral for the loaned securities. In addition, one or more Affiliates or Entities may be among theentities to which the Funds may lend their portfolio securities under the securities lending program.

The activities of BlackRock, its Affiliates and Entities and their respective directors, officers or employees may giverise to other conflicts of interest that could disadvantage the Funds and their shareholders. BlackRock has adoptedpolicies and procedures designed to address these potential conflicts of interest. See the SAI for further information.

Valuation of Fund Investments

When you buy shares, you pay the net asset value, plus any applicable sales charge. This is the offering price. Sharesare also redeemed at their net asset value, minus any applicable deferred sales charge or redemption fee. A Fundcalculates the net asset value of each class of its shares each day the NYSE is open, generally as of the close ofregular trading hours on the NYSE, based on prices at the time of closing. The NYSE generally closes at 4:00 p.m.(Eastern time). The net asset value used in determining your share price is the next one calculated after your purchaseor redemption order is received.

Equity securities and other instruments for which market quotations are readily available are valued at market value,which is generally determined using the last reported closing price or, if a reported closing price is not available, thelast traded price on the exchange or market on which the security or instrument is primarily traded at the time ofvaluation. Each Fund values fixed-income portfolio securities and non-exchange traded derivatives using last availablebid prices or current market quotations provided by dealers or prices (including evaluated prices) supplied by theFund’s approved independent third-party pricing services, each in accordance with valuation procedures approved bythe Board. Pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions toderive values. Pricing services generally value fixed-income securities assuming orderly transactions of institutionalround lot size, but the Fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade atlower prices than institutional round lots. Short-term debt securities with remaining maturities of 60 days or less maybe valued on the basis of amortized cost.

Foreign currency exchange rates are generally determined as of the close of business on the NYSE. Foreign securitiesowned by the Funds may trade on weekends or other days when a Fund does not price its shares. As a result, a Fund’snet asset value may change on days when you will not be able to purchase or redeem a Fund’s shares.

Generally, trading in foreign securities, U.S. Government securities, money market instruments and certain fixed-income securities is substantially completed each day at various times prior to the close of business on the NYSE. Thevalues of such securities used in computing the net asset value of a Fund’s shares are determined as of such times.

When market quotations are not readily available or are not believed by BlackRock to be reliable, a Fund’s investmentsare valued at fair value. Fair value determinations are made by BlackRock in accordance with procedures approved by

44

the Board. BlackRock may conclude that a market quotation is not readily available or is unreliable if a security orother asset or liability does not have a price source due to its lack of liquidity, if BlackRock believes a market quotationfrom a broker-dealer or other source is unreliable, where the security or other asset or other liability is thinly traded(e.g., municipal securities, certain small cap and emerging growth companies and certain non-U.S. securities) or wherethere is a significant event subsequent to the most recent market quotation. For this purpose, a “significant event” isdeemed to occur if BlackRock determines, in its business judgment prior to or at the time of pricing a Fund’s assets orliabilities, that it is likely that the event will cause a material change to the last closing market price of one or moreassets or liabilities held by a Fund. For instance, significant events may occur between the foreign market close andthe close of business on the NYSE that may not be reflected in the computation of the Funds’ net assets. If suchevent occurs, those instruments may be fair valued. Similarly, foreign securities whose values are affected by volatilitythat occurs in U.S. markets on a trading day after the close of foreign securities markets may be fair valued.

For certain foreign securities, a third-party vendor supplies evaluated, systematic fair value pricing based upon themovement of a proprietary multi-factor model after the relevant foreign markets have closed. This systematic fair valuepricing methodology is designed to correlate the prices of foreign securities following the close of the local markets tothe price that might have prevailed as of a Fund’s pricing time.

Fair value represents a good faith approximation of the value of a security. The fair value of one or more securities maynot, in retrospect, be the price at which those assets could have been sold during the period in which the particularfair values were used in determining a Fund’s net asset value.

A Fund may accept orders from certain authorized Financial Intermediaries or their designees. A Fund will be deemedto receive an order when accepted by the Financial Intermediary or designee and the order will receive the net assetvalue next computed by the Fund after such acceptance. If the payment for a purchase order is not made by adesignated later time, the order will be canceled and the Financial Intermediary could be held liable for any losses.

Dividends, Distributions and Taxes

BUYING A DIVIDEND

Unless your investment is in a tax-deferred account, you may want to avoid buying shares shortly before the Fundpays a dividend. The reason? If you buy shares when a Fund has declared but not yet distributed ordinary income orcapital gains, you will pay the full price for the shares and then receive a portion of the price back in the form of ataxable dividend. Before investing you may want to consult your tax adviser.

The Fund will distribute net investment income, if any, monthly and net realized capital gain, if any, at least annually.The Fund may also pay a special distribution at the end of the calendar year to comply with federal tax requirements.Dividends may be reinvested automatically in shares of a Fund at net asset value without a sales charge or may betaken in cash. If you would like to receive dividends in cash, contact your Financial Intermediary or the Fund. Althoughthis cannot be predicted with any certainty, a Fund anticipates that a significant amount of its dividends, if any, willconsist of ordinary income. Capital gains may be taxable to you at different rates depending on how long a Fund heldthe assets sold.

You will pay tax on dividends from the Fund whether you receive them in cash or additional shares. If you redeem Fundshares or exchange them for shares of another fund, you generally will be treated as having sold your shares and anygain on the transaction may be subject to tax. Fund distributions derived from qualified dividend income, whichconsists of dividends received from U.S. corporations and qualifying foreign corporations, and from long-term capitalgains are eligible for taxation at a maximum rate of 15% or 20% for individuals, depending on whether their incomeexceeds certain threshold amounts, which are adjusted annually for inflation.

A 3.8% Medicare tax is imposed on the net investment income (which includes, but is not limited to, interest,dividends and net gain from investments) of U.S. individuals with income exceeding $200,000, or $250,000 if marriedfiling jointly, and of trusts and estates.

Your dividends and redemption proceeds will be subject to backup withholding tax if you have not provided a taxpayeridentification number or social security number or the number you have provided is incorrect.

If you are neither a tax resident nor a citizen of the United States or if you are a foreign entity (other than a pass-through entity to the extent owned by U.S. persons), the Fund’s ordinary income dividends will generally be subject to a30% U.S. withholding tax, unless a lower treaty rate applies. However, certain distributions reported by the Fund as

45

capital gain dividends, interest-related dividends or short-term capital gain dividends and paid to a foreign shareholdermay be eligible for an exemption from U.S. withholding tax.

Separately, a 30% withholding tax is currently imposed on U.S.-source dividends, interest and other income items paidto (i) certain foreign financial institutions and investment funds, and (ii) certain other foreign entities. To avoidwithholding, foreign financial institutions and investment funds will generally either need to (a) collect and report to theIRS detailed information identifying their U.S. accounts and U.S. account holders, comply with due diligenceprocedures for identifying U.S. accounts and withhold tax on certain payments made to noncomplying foreign entitiesand account holders or (b) if an intergovernmental agreement is entered into and implementing legislation is adopted,comply with the agreement and legislation. Other foreign entities will generally either need to provide detailedinformation identifying each substantial U.S. owner or certify there are no such owners.

This section summarizes some of the consequences under current federal tax law of an investment in the Fund. It isnot a substitute for individualized tax advice. Consult your tax adviser about the potential tax consequences of aninvestment in the Fund under all applicable tax laws.

46

The High Yield Fund and the Low Duration Fund acquired all of the assets, subject to the liabilities, of BlackRock HighYield Bond Portfolio, a series of BlackRock Funds II (the “High Yield Predecessor Fund”) and BlackRock Low DurationBond Portfolio, a series of BlackRock Funds II (the “Low Duration Predecessor Fund” and together with the High YieldPredecessor Fund, the “Predecessor Funds” and each, a “Predecessor Fund”), respectively, in reorganizations onSeptember 17, 2018 (together the “Reorganization”). As a result of the Reorganization, the Financial Highlightsinformation presented for a Fund is the financial history of the corresponding Predecessor Fund. The FinancialHighlights table is intended to help you understand each Fund’s financial performance for the periods shown. Certaininformation reflects the financial results for a single Fund share. The total returns in the table represent the rate thatan investor would have earned or lost on an investment in the indicated Fund (assuming reinvestment of all dividendsand/or distributions). The information has been audited by Deloitte & Touche LLP, whose report, along with eachFund’s financial statements, is included in each indicated Fund’s Annual Report, which is available upon request.

BlackRock High Yield Bond Portfolio

Investor C1

Year Ended September 30,

(For a share outstanding throughout each period) 2019 2018 2017 2016 2015

Net asset value, beginning of year $ 7.68 $ 7.86 $ 7.62 $ 7.43 $ 8.21

Net investment income(a) 0.38 0.36 0.36 0.34 0.33Net realized and unrealized gain (loss) 0.02 (0.16) 0.29 0.25 (0.62)

Net increase (decrease) from investment operations 0.40 0.20 0.65 0.59 (0.29)

Distributions(b)

From net investment income (0.39) (0.38) (0.41) (0.40) (0.37)From net realized gain — — — — (0.12)

Total distributions (0.39) (0.38) (0.41) (0.40) (0.49)

Net asset value, end of year $ 7.69 $ 7.68 $ 7.86 $ 7.62 $ 7.43

Total Return(c)

Based on net asset value 5.39% 2.65% 8.67%(d) 8.23% (3.68)%

Ratios to Average Net Assets(e)

Total expenses 1.51% 1.43% 1.51% 1.51% 1.49%

Total expenses after fees waived and/or reimbursed 1.48% 1.43% 1.51% 1.51% 1.49%

Total expenses after fees waived and/or reimbursed and excluding interestexpense and income tax 1.48% 1.43% 1.48% 1.50% 1.49%

Net investment income 5.00% 4.69% 4.75% 4.69% 4.19%

Supplemental Data

Net assets, end of year (000) $1,339 $9,409 $12,353 $52,539 $61,492

Portfolio turnover rate 102% 90% 86% 90% 70%

(a) Based on average shares outstanding.(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.(c) Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.(d) Includes payment received from an affiliate, which had no impact on the Fund’s total return.(e) Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:


2019 2018 2017 2016 2015

Investments in underlying funds 0.02% 0.01% 0.01% 0.01% 0.01%

Financial Highlights

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BlackRock Low Duration Bond Portfolio

Investor A1




Net investment income(a) 0.24 0.20 0.15 0.15 0.14Net realized and unrealized gain (loss) 0.17 (0.14) 0.03 (0.01) (0.05)

Net increase from investment operations 0.41 0.06 0.18 0.14 0.09

Distributions(b)

From net investment income (0.25) (0.20) (0.19) (0.17) (0.16)From return of capital (0.00)(c) (0.02) — — —



Total Return(d)

Based on net asset value 4.38%(e) 0.59%(e) 1.88% 1.48% 0.94%

Ratios to Average Net Assets

Total expenses 0.59%(f) 0.70% 0.66% 0.68% 0.69%

Total expenses after fees waived and/or reimbursed 0.50%(f) 0.59% 0.53% 0.62% 0.60%

Total expenses after fees waived and/or reimbursed and excluding interestexpense 0.50%(f) 0.51% 0.51% 0.60% 0.60%

Net investment income 2.51%(f) 2.09% 1.59% 1.51% 1.47%

Supplemental Data

Net assets, end of year (000) $8,621 $9,492 $10,751 $11,892 $14,742

Portfolio turnover rate (g) 182% 218% 292% 316% 289%

(a) Based on average shares outstanding.(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.(c) Amount is greater than $(0.005) per share.(d) Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.(e) Includes payment received from an affiliate, which had no impact on the Fund’s total return.(f) Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%.(g) Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:


2019 2018 2017 2016 2015

Portfolio turnover rate (excluding MDRs) 144% 169% 208% 246% 231%

Financial Highlights (continued)

48

Investor C2




Net investment income(a) 0.21 0.17 0.11 0.11 0.11Net realized and unrealized gain (loss) 0.17 (0.14) 0.04 — (0.05)

Net increase from investment operations 0.38 0.03 0.15 0.11 0.06

Distributions(b)




Total Return(d)

Based on net asset value 4.05%(e) 0.28%(e) 1.57% 1.14% 0.60%


Total expenses 1.21%(f) 1.04% 0.97%(g) 0.98% 0.99%




Supplemental Data

Net assets, end of year (000) $ 13 $ 574 $ 852 $6,139 $6,938

Portfolio turnover rate(h) 182% 218% 292% 316% 289%

(a) Based on average shares outstanding.(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.(c) Amount is greater than $(0.005) per share.(d) Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.(e) Includes payment received from an affiliate, which had no impact on the Fund’s total return.(f) Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%.(g) Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.(h) Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:


2019 2018 2017 2016 2015


Financial Highlights (continued)

BlackRock Low Duration Bond Portfolio (continued)

49

Investor C3




Net investment income(a) 0.16 0.12 0.06 0.06 0.06Net realized and unrealized gain (loss) 0.18 (0.15) 0.04 (0.01) (0.06)

Net increase (decrease) from investment operations 0.34 (0.03) 0.10 0.05 0.00

Distributions(b)




Total Return(d)

Based on net asset value 3.66%(e) (0.32)%(e) 1.07% 0.57% 0.14%


Total expenses 1.61%(f) 1.67% 1.56%(g) 1.57% 1.57%




Supplemental Data

Net assets, end of year (000) $ 463 $1,675 $2,197 $18,350 $21,631

Portfolio turnover rate(h) 182% 218% 292% 316% 289%

(a) Based on average shares outstanding.(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.(c) Amount is greater than $(0.005) per share.(d) Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions.(e) Includes payment received from an affiliate, which had no impact on the Fund’s total return.(f) Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%.(g) Includes recoupment of past waived and/or reimbursed fees with no financial impact to the expense ratios.(h) Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:


2019 2018 2017 2016 2015


Financial Highlights (concluded)

BlackRock Low Duration Bond Portfolio (concluded)

50

General Information

Shareholder Documents

Electronic Access to Annual Reports, Semi-Annual Reports and ProspectusesElectronic copies of most financial reports and prospectuses are available on BlackRock’s website. Shareholders cansign up for e-mail notifications of annual and semi-annual reports and prospectuses by enrolling in the Fund’selectronic delivery program. To enroll:

Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages: Please contact your FinancialIntermediary. Please note that not all investment advisers, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly With BlackRock:

� Access the BlackRock website at http://www.blackrock.com/edelivery; and

� Log into your account.

Delivery of Shareholder DocumentsEach Fund delivers only one copy of shareholder documents, including prospectuses, shareholder reports and proxystatements, to shareholders with multiple accounts at the same address. This practice is known as “householding”and is intended to eliminate duplicate mailings and reduce expenses. Mailings of your shareholder documents may behouseholded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to becombined with those for other members of your household, please contact the Funds at (800) 441-7762.

Certain Fund Policies

Anti-Money Laundering RequirementsEach Fund is subject to the USA PATRIOT Act (the “Patriot Act”). The Patriot Act is intended to prevent the use of theU.S. financial system in furtherance of money laundering, terrorism or other illicit activities. Pursuant to requirementsunder the Patriot Act, each Fund is required to obtain sufficient information from shareholders to enable it to form areasonable belief that it knows the true identity of its shareholders. This information will be used to verify the identityof investors or, in some cases, the status of Financial Intermediaries. Such information may be verified using third-party sources. This information will be used only for compliance with the Patriot Act or other applicable laws,regulations and rules in connection with money laundering, terrorism, or economic sanctions.

Each Fund reserves the right to reject purchase orders from persons who have not submitted information sufficient toallow the Fund to verify their identity. Each Fund also reserves the right to redeem any amounts in the Fund frompersons whose identity it is unable to verify on a timely basis. It is each Fund’s policy to cooperate fully withappropriate regulators in any investigations conducted with respect to potential money laundering, terrorism, or otherillicit activities.

BlackRock Privacy PrinciplesBlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients(collectively, “Clients”) and to safeguarding their non-public personal information. The following information is providedto help you understand what personal information BlackRock collects, how we protect that information and why incertain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you withadditional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with thosespecific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including thefollowing: (i) information we receive from you or, if applicable, your Financial Intermediary, on applications, forms orother documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receivefrom a consumer reporting agency; and (iv) from visits to our website.

51

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients,except as permitted by law, or as is necessary to respond to regulatory requests or to service Client accounts. Thesenon-affiliated third parties are required to protect the confidentiality and security of this information and to use it onlyfor its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about otherBlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-publicpersonal information about its Clients to those BlackRock employees with a legitimate business need for theinformation. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of suchinformation.

Statement of Additional Information

If you would like further information about the Funds, including how they invest, please see the SAI.

For a discussion of each Fund’s policies and procedures regarding the selective disclosure of their portfolio holdings,please see the SAI. The Funds make their top ten holdings available on a monthly basis at www.blackrock.comgenerally within 5 business days after the end of the month to which the information applies.

52

GlossaryThis glossary contains an explanation of some of the common terms used in this prospectus. For additionalinformation about the Funds, please see the SAI.

Acquired Fund Fees and Expenses — fees and expenses charged by other investment companies in which the Fundinvests a portion of its assets.

Annual Fund Operating Expenses — expenses that cover the costs of operating the Fund.

Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index — an unmanaged index comprised of issuesthat meet the following criteria: at least $150 million par value outstanding, maximum credit rating of Ba1, at leastone year to maturity, and no one issuer represents more than 2 percent of the index.

Distribution Fees — fees used to support a Fund’s marketing and distribution efforts, such as compensating FinancialIntermediaries, advertising and promotion.

ICE BofAML 1-3 Year US Corporate & Government Index — an unmanaged index comprised of investment gradecorporate bonds and U.S. Government Agency and U.S. Treasury securities with a maturity ranging from one to threeyears.

Management Fee — a fee paid to BlackRock for managing a Fund.

Other Expenses — include accounting, transfer agency, custody, professional fees and registration fees.

Service Fees — fees used to compensate Financial Intermediaries for certain shareholder servicing activities.

Shareholder Fees — fees paid directly by a shareholder, including sales charges that you may pay when you buy or sellshares of a Fund.

53

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For More Information

Funds and Service Providers

FUNDS

BlackRock Funds VBlackRock High Yield Bond PortfolioBlackRock Low Duration Bond Portfolio

100 Bellevue ParkwayWilmington, Delaware 19809

Written Correspondence:P.O. Box 9819Providence, Rhode Island 02940-8019

Overnight Mail:4400 Computer DriveWestborough, Massachusetts 01581

(800) 441-7762

MANAGER AND ADMINISTRATORBlackRock Advisors, LLC100 Bellevue ParkwayWilmington, Delaware 19809

SUB-ADVISERBlackRock International LimitedExchange Place One1 Semple StreetEdinburgh, EH3 8BL, United Kingdom

TRANSFER AGENTBNY Mellon Investment Servicing (US) Inc.301 Bellevue ParkwayWilmington, Delaware 19809

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMDeloitte & Touche LLP200 Berkeley StreetBoston, Massachusetts 02116

ACCOUNTING SERVICES PROVIDER

JPMorgan Chase Bank, N.A.383 Madison Avenue, Floor 11New York, New York 10179

DISTRIBUTORBlackRock Investments, LLC40 East 52nd StreetNew York, New York 10022

CUSTODIAN

JPMorgan Chase Bank, N.A.383 Madison Avenue, Floor 11New York, New York 10179

COUNSELWillkie Farr & Gallagher LLP787 Seventh AvenueNew York, New York 10019-6099

Additional Information

For more information:This prospectus contains important information you shouldknow before investing, including information about risks.Please read it before you invest and keep it for futurereference. More information about the Funds is availableat no charge upon request. This information includes:

Annual/Semi-Annual ReportsThese reports contain additional information about each ofthe Fund’s investments. The annual report describes theFund’s performance, lists portfolio holdings, and discussesrecent market conditions, economic trends and Fundinvestment strategies that significantly affected a Fund’sperformance for the last fiscal year.

Statement of Additional InformationA Statement of Additional Information (“SAI”), datedJanuary 28, 2020, has been filed with the Securities andExchange Commission (the “SEC”). The SAI, whichincludes additional information about each Fund, may beobtained free of charge, along with each Fund’s annualand semi-annual reports, by calling (800) 441-7762. TheSAI, as amended and/or supplemented from time to time,is incorporated by reference into this prospectus.

BlackRock Investor ServicesRepresentatives are available to discuss account balanceinformation, mutual fund prospectuses, literature,programs and services available. Hours: 8:00 a.m. to6:00 p.m. (Eastern time), on any business day. Call:(800) 441-7762.

Purchases and RedemptionsCall your Financial Intermediary or BlackRockInvestor Services at (800) 441-7762.

World Wide WebGeneral Fund information and specific Fund performance,including the SAI and annual/semi-annual reports, can beaccessed free of charge at www.blackrock.com/prospectus. Mutual fund prospectuses and literature canalso be requested via this website.

Written CorrespondenceBlackRock Funds VP.O. Box 9819Providence, Rhode Island 02940-8019

Overnight MailBlackRock Funds V4400 Computer DriveWestborough, Massachusetts 01581

Internal Wholesalers/Broker Dealer SupportAvailable on any business day to support investmentprofessionals. Call: (800) 882-0052.

Portfolio Characteristics and HoldingsA description of the Fund’s policies and proceduresrelated to disclosure of portfolio characteristics andholdings is available in the SAI.

For information about portfolio holdings andcharacteristics, BlackRock fund shareholders andprospective investors may call (800) 882-0052.

Securities and Exchange CommissionYou may also view and copy public information about eachFund, including the SAI, by visiting the EDGAR databaseon the SEC’s website (http://www.sec.gov). Copies of thisinformation can be obtained, for a duplicating fee, byelectronic request at the following e-mail address:[email protected].

You should rely only on the information contained inthis prospectus. No one is authorized to provide youwith information that is different from informationcontained in this prospectus.

The SEC and the Commodity Futures Trading Commissionhave not approved or disapproved these securities orpassed upon the adequacy of this prospectus. Anyrepresentation to the contrary is a criminal offense.

INVESTMENT COMPANY ACT FILE # 811-23339© BlackRock Advisors, LLC

PROV-BD3-PRI-0120

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